Trump Touts ‘All Tariff Policy’ to Replace Income Tax
“Tariffs, tariffs, tariffs!” might as well be former President Donald Trump’s campaign slogan.
The Republican nominee huddled with GOP lawmakers in at the Capitol Hill Club in Washington, D.C. on Thursday to game out a potential second term. At the closed-door meeting, the newly convicted presidential hopeful floated the idea of imposing an “all tariff policy” to replace income taxes in the U.S., according to sources who spoke to CNBC.
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The outlet reported that Trump talked about using tariffs as a negotiating chip in conversations with adversaries—a position he has held since imposing Section 301 punitive duties on China-made goods in 2018. President Joe Biden has maintained the Trump-era tariffs as a source of leverage as the enmity between Washington and Beijing continues to deepen.
Trump’s pro-tariff stance is nothing new—for months he has threatened to up taxes on Chinese imports by 60 percent or more if re-elected, and has also mused about imposing a 10-percent universal tax increase on goods across the board.
The strategy, he believes, would offset the cost of income tax cuts he has promised to make if sworn in in January. But in a May report, the Peterson Institute for International Economics (PIIE) claims to have disproven that theory. The group wrote that increases in tariffs would only partially pay for the proposed tax cuts, and what’s more, the increased duty burden would cost middle-class families at least $1,700 more each year.
“Trump’s proposal, if true, would take with one hand, and take even more with the other,” American Apparel and Footwear Association (AAFA) senior vice president of policy Nate Herman told Sourcing Journal. “Instead of giving American workers more money in their pockets, Trump’s proposal would amount to a huge tax increase on hardworking Americans, particularly lower- and middle-income Americans who already pay huge, hidden, and regressive taxes on the clothes, shoes and backpacks they have to buy for themselves and their families.”
And as inflation lingers, shoppers are simply sick of paying more for the goods they need, he believes. “These remarks come as we are witnessing the most sustained increase in apparel in footwear prices in over 40 years, after decades of deflation,” Herman said.
“It’s absurd and will result in higher prices for families across the country,” California Governor Gavin Newsom tweeted in response to Trump’s 10-percent universal baseline tariffs proposal. “This ‘plan’ will do nothing but raise prices and drive up the deficit.”
Kyle Pomerleau, a senior fellow at the American Enterprise Institute (AEI), called Trump’s plan “Fundamentally unserious stuff,” tweeting that, “A tax on imports is also a tax on exports. Both would fall in response to this policy.”
“We would face the economic cost of retaliation, but get no federal revenue from it,” he added.