Trump's tariffs will be costly, but that's not the worst part

Donald Trump is obsessed with raising tariffs. Though it’s tricky to predict how much he will hike them, they will be higher than today’s average rate of 2.4 percent. Hardly a day passes without Trump mentioning how “beautiful” and profitable tariffs are. And this week, he laid bare why he will raise them this year: He needs money to pay for bigger tax cuts.

While vowing to make these tax cuts “even better” with no taxes on tips, Trump wrote on his social media site: “It will all be made up with tariffs, and much more, from countries that have taken advantage of the U.S. for years.”

This is Trump’s worst argument for tariffs yet. The math doesn’t add up. Extending his 2017 tax cuts for another decade would cost $5 trillion. But putting 10 percent tariffs on all imports (plus more on China), as the president-elect has suggested, would raise about $2.7 trillion over the next decade, and that is an optimistic estimate.

At some point, it will sink in that American consumers are the ones who pay for hefty tariffs. A typical household would pay more than $1,200 a year. The Tax Foundation ran the numbers and found that the bottom 40 percent of households would lose, because they would pay more in tariffs than they would get back in tax cuts. The Peterson Institute for International Economics found that the bottom 80 percent would be worse off, and only the richest Americans would benefit.

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