Trump's tariff would cost the typical American household $1,500 each year

By Brendan Duke*

Apr 24, 2024, 12:29 PM EDT

In his campaign for a second term, one of the few economic policies that former President Donald Trump has offered is a blanket 10 percent tariff on all imports, in addition to existing tariffs. Trump and his campaign have been talking about this policy since August 2023, painting it as a tax on China that will bring jobs back to the United States. But that couldn’t be further from the truth.

A new analysis from the Center for American Progress Action Fund found that a blanket tariff, as proposed by Trump, would be equivalent to an annual tax increase of about $1,500 for a typical American household. This tax increase would in turn increase costs and fail to boost manufacturing or jobs in the United States.

The burden of the tariff will fall on Americans, not other countries

Trump has said his proposal will act as a tax on China and foreign companies. But tariffs don’t work that way. They are a tax that is applied to US importers when the product they buy enters the national market. These importers are typically U.S. companies—not foreign—that import products for distribution to local consumers—that is, us. We saw this already with Trump’s previous tariffs: studies have shown that it was up to Americans to bear the majority of the cost. Some Trump allies have even admitted that his 10 percent tariff would increase consumer costs and directly contribute to inflation.

The 10 percent across-the-board tariff proposed by the Trump campaign would dramatically increase the cost of goods for families across the country. According to CAP Action Fund analysis, the typical household would pay approximately $1,500 more in taxes each year. This includes $90 in taxes on food, $90 on medicines, and $120 on oil and derived products, among others.

The blanket tariff would also increase food costs in the long term, as American farmers would face higher costs to obtain supplies. And it would also affect other industrial supplies and capital goods that American companies use to produce goods and services. This would result in a $610 tax increase, which will be felt through higher prices for services like health care and dining out, and even for new housing.

Without a doubt: The general tariff would affect every aspect of life. “Trump’s tariffs will crush the American middle class by raising the cost of everything from food, fuel, clothing and more, while failing to boost American manufacturing,” said Brendan Duke, senior director of economic policy at CAP Action.

Trump’s strategy to revive manufacturing failed, but Biden’s is working

Trump’s record shows how ineffective his strategy of just using tariffs to prevent jobs from going overseas was. According to a recent analysis, his tariffs on Chinese goods did not have a significant effect on American employment. Instead, they sparked retaliatory foreign tariffs that impacted American jobs, especially in agriculture.

Meanwhile, the Biden administration has taken another approach that is working. The best way to attract global manufacturers to relocate to the United States is to invest in the American manufacturing sector. That’s what President Biden and Congressional Democrats have done through the Inflation Reduction Act, the CHIPS and Science Act, and other historic investments in the American economy. These laws have helped spur $650 billion in new private sector investment in manufacturing.

Unlike the Trump campaign’s approach, the Biden administration’s approach has not been about raising prices for consumers; has reduced them. The successes the Biden administration is already seeing show that making the United States a 21st-century manufacturing power requires strategic, forward-thinking investments, not blanket tariffs to the wind.

Brendan Duke,