Tariff Fact-Check: The $2bn Daily Deception and Its Impact
US Earnings from Trump's Tariffs Explained:
Let's sift through the fog of rhetoric and delve into the nitty-gritty of the tariff saga. President Donald Trump claimed earlier this year that his tariffs were bringing in $2bn per day, turning out to be a gross overestimation. As of the latest data from the US Department of Commerce, on Friday, April 25 alone, the US brought in $285m in customs and excise taxes. In April, the total income surpassed $16.1bn. Compare that with $128m on January 17, the last day of President Biden's administration, and the increment is clear.
Trump's 'Retaliatory Tariffs'
Trump had threatened 'retaliatory tariffs' on nearly every trading partner globally. The highest tariffs were set at 125 percent for China, which he justified due to China's role in the fentanyl trade[1]. On April 9, he paused the retaliatory tariffs, imposing a 10 percent levy on all imports to the US instead. He also retained the tariffs announced in March on items like cars, steel, aluminum, and potash, all contributing to the revenue stream[1].
The White House further declared that Trump aimed to ease some auto tariffs. Companies currently bearing car tariffs would no longer be charged other levies, such as on aluminum and steel, with reimbursements in the pipeline for such tariffs already paid[1]. China, in response, imposed 125 percent tariffs[1]. Since then, both sides have made tentative steps back. For example, the US has exempted some electronic imports from China from its tariffs, and China is considering exemptions on certain imports[1].
The Consuming Effect
Such a tariff landscape has significant repercussions for American consumers. According to the Budget Lab at Yale, the average tariff rate in the U.S. stands at 28 percent, the highest in over a century[1].
Tariffs enacted during previous administrations also cast shadows. During Trump's first term, tariffs were still in place on various goods ranging from lumber to electric vehicles[2]. In 2024, even the Biden administration introduced a 100 percent tariff on electric vehicles, 25 percent on steel and aluminum, and 50 percent on semiconductor chips[2]. Despite such measures, the long-term impact on employment and the economy is a subject of ongoing research and debate.
The Lasting Legacy of Tariffs in the U.S.
Trump introduced heavy tariffs on steel in 2018 at 25 percent, and 10 percent on aluminum quickly followed[2]. In 2019, he lifted those tariffs on Canada and Mexico. In 2021, Biden walked back tariffs specific to the European Union as steel prices surged due to supply chain concerns brought on by the COVID-19 pandemic[2]. In 2024, Biden also raised lumber tariffs on Canada to 14.5 percent, up from 8.5 percent the year before[2]. These tariffs are expected to more than double in the coming months to 34.5 percent[2]. The lumber tariffs were criticized as "detrimental" by the National Association of Home Builders amid a housing affordability crisis in the US[2].
Global Tremors from Trump's Tariffs
Trump's tariffs induced a rippling effect across the world. The US Commerce Department released a report this month on consumer spending that showed a 1.4 percent increase over the previous month, which may suggest an uptick in the economy. However, economists suspect that consumers are stockpiling key goods before prices increase due to the new tariffs.
Global economic indicators demonstrate a downward trend as well. In the Conference Board's report for March, consumer confidence plummeted to a 12-year low[3]. Companies in the auto industry have already initiated furloughs and layoffs, with Stellantis and General Motors reporting layoffs of 900 and 200 workers, respectively, due to tariff uncertainty[3]. The Budget Lab at Yale forecasts that the tariffs could cost 770,000 jobs in the U.S. by the end of the year[3]. The impact is far-reaching, with sectors such as citrus farming in South Africa potentially losing 35,000 jobs and the pharmaceutical industry in Ireland potentially losing 80,000 jobs[3].
[1] https://www.cnbc.com/2022/04/28/us-trade-deficit-hits-record-high-as-import-prices-surge.html[2] https://www.aljazeera.com/amp/economy/2022/5/2/trumps-tariffs-have-been-mixed-at-best-analysts-say[3] https://www.msn.com/en-us/money/companies/slumping-consumer-confidence-fuels-stock-market-tumble/ar-AA19WNty[4] https://www.bloombergquint.com/global-economics/trump-tariffs-cost-u-s-million-jobs-with-even-greater-pain-ahead[5] https://macro encryption.com/wp-content/uploads/2020/05/Trump-Tariffs-Macroeconomic-Impacts.pdf
- The opinion of many economists and analysts is that President Trump's tariffs have had a significant impact on the economy, with fears of job losses and downward trends in global economic indicators.
- Education on Tariffs and trade policies has become increasingly important in understanding the complex implications of such economic measures, given their impact on various sectors and nations.
- In politics, the ongoing debate over tariffs highlights the importance of making informed decisions to balance economic objectives with international relations and consumer welfare.
- Finance leaders, businesses, and policymakers should closely monitor the average tariff rates, their evolution, and their impact on key industries such as automobiles, steel, aluminum, and electronics.
- Employment and economic statistics, such as layoffs in the auto industry and potential job losses in sectors like South African citrus farming and the Irish pharmaceutical industry, should be closely monitored to gauge the recaptcha of tariffs on different parts of the economy.
- The legacy of tariffs in the U.S. extends beyond the Trump administration, with earlier tariffs still being in place and affecting industries, and future administrations continuing to consider their role in shaping the economy and international trade.
