U.S. Treasury Secretary: Trump tariffs will make life harder for Americans

The prospect of a second Trump presidency could be bad news for Americans grappling with inflation.

According to U.S. Treasury Secretary Janet Yellen, Donald Trump’s proposed universal tariffs on imports would raise costs for American consumers and hurt businesses.

“These are really across-the-board tariffs, as I understand it, that would affect all of our trade partners and all of our trade,” Yellen told reporters in Atlanta.

“I believe that is a substantial enough program that it would both raise costs to consumers broadly on all the imports they buy and harm American businesses."

While the U.S. economy is largely dependent on its own consumers, many businesses "rely on imported goods for their supply chains that would significantly raise their costs,” she explained.

As the presumptive Republican nominee, Trump recently announced plans to replace income tax with tariffs if he retakes the White House. The plan includes a blanket 10% levy on imports and even higher tariffs on Chinese products.

The irony of Yellen’s criticism is that her own administration has introduced higher tariffs. The caveat is that President Biden’s tariffs are more targeted, focusing primarily on Chinese EVs, solar cells, and steel.

Regardless of who implements them, tariffs could end up harming American consumers by increasing the costs of goods.

Tariffs are taxes on the consumer

Tariffs might sound like a good idea on the surface, but they have unintended consequences—regardless of whether they’re broad like Trump’s plan or more targeted like Biden’s policies.

As The Economist explains, “Tariffs are taxes, which create a wedge between the price paid by buyers of imported goods and the one foreign sellers get.”

And while narrow tariffs on certain products “nudge consumers toward home-made goods,” they can discourage free exchange by compelling buyers to choose inferior or less desirable products.

Economist Peter Schiff has long opposed the use of tariffs.

He criticized the trade war during Trump’s presidency and described Biden’s recent tariffs as “taxes that will raise the price of all goods [and] will only add to the economic misery.”

Following Trump’s trade war with China, researchers at the National Bureau of Economic Research determined that “U.S. consumers of imported goods have borne the brunt of the tariffs through higher prices.”

The trade war also decreased average incomes in both China and the U.S.

In addition to taxing the consumer, experts believe tariffs impact the economy in other ways.

A 2020 study by economists at Harvard and the University of California found that Trump’s tariffs on steel and aluminum likely resulted in 75,000 fewer manufacturing jobs in the U.S.

Meanwhile, the Tax Foundation estimates that tariffs will reduce U.S. GDP by 0.21% and slash more than 166,000 jobs.