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PBS NewsHour
A look at how Trump's plan to increase tariffs would affect U.S. workers and consumers
By Paul SolmanRyan Connelly Holmes,
7 hours ago
Tariffs are a hallmark of former President Trump’s economic agenda and some of them have bipartisan support as a way of dealing with China. But there are key differences between Trump and Vice President Harris when it comes to how large and wide-ranging they should be. The potential impact is very much on the minds of some voters in battleground states. Economics correspondent Paul Solman reports.
Read the Full Transcript
Geoff Bennett: Tariffs are a hallmark of former President Donald Trump’s economic agenda, and some of them have picked up bipartisan support as a way of dealing with China.
But there are still key differences between Trump and Vice President Harris when it comes to how large and wide-ranging they should be.
As economics correspondent Paul Solman reports, the potential impact of imposing more tariffs was debated on stage last night and is very much on the minds of some voters in battleground states.
Donald Trump, Former President of the United States (R) and Current U.S. Presidential Candidate: Other countries are going to finally, after 75 years, pay us back for all that we have done for the world.
Paul Solman: Last night, former President Trump began by defending his aggressive tariff policies both from his first term and what he would do if he wins again. That includes a 10 to 20 percent tariff on all foreign goods and a 60 percent tariff, that is, import tax, on goods from China.
It was the very first policy spat in last night’s debate.
Kamala Harris, Vice President of the United States (D) and U.S. Presidential Candidate: My opponent has a plan that I call the Trump’s sales tax, which would be a 20 percent tax on everyday goods that you rely on to get through the month.
Paul Solman: To which Trump responded in part:
Donald Trump: The tariff will be substantial in some cases. I took in billions and billions of dollars, as you know, from China. In fact, they never took the tariff off because it was so much money.
Paul Solman: Almost anyone would dispute that explanation, but one thing is true. The Biden administration maintained most of the tariffs on more than $300 billion worth of goods from the original Trump regime and added tariffs on another $18 billion worth of items from steel to medical supplies, including a 100 percent tariff on Chinese electric vehicles.
Harris We are fighting for middle-class families.
Paul Solman: And Vice President Harris supports tariffs too, she said, so long as they’re much smaller and targeted. You will hear more about that in a bit.
What’s so striking is that protective tariffs were once a partisan point of stark conflict, but now both candidates are in favor of tariffs, which, of course, have such obvious appeal to workers afraid of losing their jobs, many of them swing-state voters in import-threatened industries.
Look the best-selling BYD Chinese E.V. goes for $16,000 or less in China. They’re not yet sold here, but even with Biden’s 100 percent tariff, they’d still be a bargain. And despite a plunge in Chinese consumer demand, manufacturing activity across all sectors remained strong until just recently, resulting in a glut of Chinese goods being offered on Web sites like Temu at unbelievably low prices.
I bought this cap with a watercolor by Swiss artist Paul Klee for $25 from a us firm some time ago, this one from China for grandson Will $1.69, free shipping.
Small wonder that at a Detroit Teamsters union local, there was plenty of support for protective tariffs.
Jeff Tricoff, Member, Teamsters Local 283: Short-term discomfort for long-term relief.
Casimer Guzdziol, Member, Teamsters Local 283: One way to ensure that jobs are going to be at least starting back here in the United States. good-paying jobs, jobs that they outsourced overseas, maybe it’s not something that’s going to happen immediately, but, over time, it’s probably something I think is going to be very effective at bringing jobs back to our country.
Paul Solman: But there were tariff skeptics as well.
Michael Minnis, Member, Teamsters Local 283: I would say it probably wouldn’t happen right away. So we might not benefit from it.
Paul Solman: Professor Kim Clausing worked for the Biden administration, has studied the impact of past and would-be future tariffs as an academic.
Kimberly Clausing, UCLA School of Law: Our trading partners may retaliate against our tariffs with tariffs of their own, which hurts our export sectors.
Paul Solman: So when the Trump administration slapped tariffs on imports from multiple countries, including China, it did spur some domestic production and manufacturing. Trump’s team also cites a rise in median household income during that period, before the pandemic hit, as evidence of success.
But, overall, says economist Clausing:
Kimberly Clausing: When you take a hard look at the data, they really aren’t worth it for jobs and they raise costs for consumers.
Paul Solman: How much would Trump’s latest proposal cost per year?
Kimberly Clausing: That comes out for a median family in the middle of the income distribution to be about $1,700.
Paul Solman: So how do the workers like them apples?
Dan Hammon, Member, Teamsters Local 283: Seventeen hundred dollars isn’t going to kill me. That’s all there is to it. And if it’s enough to bring jobs back here, I’m willing.
Paul Solman: Dan Hammon is a Democrat. So is Jared Jackson.
Jared Jackson, Teamsters Local 283: Some things do take time. And if that were to work, I don’t know what other repercussions would come from that and stuff. And I’m all for it.
Paul Solman: But Clausing says the $1,700 or so will mainly and really hurt low income households.
Kimberly Clausing: What’s really driving the fact that tariffs hit lower- and middle-income people harder than they hit those that are well-off is the fact that low- and middle-income people are going to the store and spending most of their money every week and every month.
Paul Solman: Moreover, she says $1,700 is a low estimate.
Kimberly Clausing: This is really an underestimate because it’s just looking at the fact that when imported prices go up, consumers take that hit. But imagine you’re going to buy something like a bottle of wine.
Well, the French wine and the Spanish wine are more expensive and that gives the Californian wine growers the opportunity to raise their prices too.
Paul Solman: In fact, Kamala Harris argued last night the impact of Trump’s tariffs could be even larger, as much as $4,000 per household per year. But are we to do nothing about the tsunami of cheap Chinese imports?
Trump economic adviser and former U.S. trade representative Robert Lighthizer has written that we have to take action — quote — “In circumstances where the exporting country’s trade distortions are systemic, broad tariffs may be the only way to offset them and reinstate market forces.”
Well, not broad tariffs, says economist Clausing.
Kimberly Clausing: I think you can reach those industries and those trade practices that you think are unfair with much more targeted, careful and strategic tariffs, but I don’t think there’s any reason or any argument to have such broad-based across-the-board tariffs.
Paul Solman: And that’s what the Democrats are proposing, says Clausing.
Kimberly Clausing: I don’t think that means you want to completely unilaterally disagree to never have a tariff, because, as our trading partners in Europe and elsewhere realize, it’s important to have tools at your disposal when other countries are doing unfair trade practices.
Paul Solman: Tax expert Jim Hines says there’s a basic problem with all tariffs, though, that most people never think about.
James Hines, University of Michigan Law School: If you put on a tariff, it increases the value of the dollar, and that makes it harder to export.
Paul Solman: Why does the value of the dollar go up if you impose tariffs?
James Hines: One way to think about it is we have less demand for foreign currency now.
Paul Solman: Now, stick with us here. That’s because we need to buy foreign currency in order to buy foreign goods. We buy that currency with dollars, but if we buy fewer foreign goods:
James Hines: We’re not buying foreign currency, and so the dollar gets stronger relative to the foreign currencies.
Paul Solman: As an inevitable result, dollar-priced American goods become more expensive, and thus American exports will go down.
James Hines: It’s a tough argument, but it’s true.
Paul Solman: Moreover, says Clausing:
Kimberly Clausing: Even in those heartland regions, where you would expect people to be pro-tariff, the job losses from the retaliation and the shocks were higher than the job gains due to the protection from the tariffs.
Paul Solman: But let’s face it, these are tough arguments, as is the argument for free trade in general. In the short run, workers feel threatened by foreign competition or, as Trump enthusiast Brian Pannebecker says:
Brian Pannebecker, Retired Autoworker: I want to have a job, and that’s what I think what President Trump is going for, is protecting American jobs.
Paul Solman: Does Jim Hines not sympathize?
James Hines: Your heart goes out to people who lose their jobs because of competition from foreign imports. It absolutely does. And I’m not saying there shouldn’t be assistance for those people and those industries and those communities. I think there should be.
But if the question is, should we adopt bad economic policies thinking that, by doing so, we’re helping American workers, that’s just confusion.
Paul Solman: For the “PBS News Hour,” Paul Solman in and around Detroit.
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