Governments around the world are in waiting for the televised duel on Tuesday night between Donald Trump and Kamala Harris but above all for the results of the American elections next November to understand what will happen to international trade if Washington were to open a new “duty front”. The possibility of a new package of customs increases would evidently concern the possibility of an encore by Donald Trump's White House.
But what would happen to the domestic American economy in a scenario of additional duties introduced by the United States and “suffered” by American consumers?
Trump's second term would cost American families over $2.600 a year
According to an interesting study by the Peterson Institute for International Economics in Washington, Trump's proposals would cost over $2.600 a year to American families. Even during the last summer electoral events, the former president reiterated his intentions impose even higher tariffs than those floated at the start of his campaign. Economists Kimberly Clausing and Mary E. Lovely analyzed the effects of Trump's tariff proposals, which include a 60 percent tariff on all imports from China and a 10 percent across-the-board tariff on all imports from other countries.
The Peterson Institute has calculated that the revenue from tariff proposals Trump's government spending would be about $225 billion a year. This figure is likely an overestimate, however, as it does not take into account the reduction in economic growth due to the inevitable economic shocks caused by retaliation against U.S. exporters and losses suffered by the import-dependent manufacturing sector.
Exporters also penalized
Even the exporters would be penalized from the appreciation of the dollar. In any case, the latest statements by the Republican candidate indicate that his economic entourage is even considering duties of up to 20 percent on most imports. According to the scenario constructed by the PIIE on these latest tariff hypotheses, that is, the imposition of a 20 percent duty on all imports, combined with the 60 percent duty on China, the “Trump package” would cost U.S. families more than $2.600 a year average income. That’s up from the $1.700 loss in net income that would result from his previous plan.
High tariffs also lead to a massive shift in the tax burden from wealthier taxpayers to low-income families. Following the Clausing and Lovely method, the losses would be greater for those with the lowest incomes. average family would see its net income decline by about 4,1 percent, more than $2.600. However, the1 percent richer would see an increase in income, as losses from tariffs would be more than offset by Trump's proposed tax cuts.
Income taxes instead of duties?
Ma Could Trump Replace Income Taxes With Tariffs? No, and attempting to do so would be regressive and harmful to economic growth: is the answer given in another article by Kimberly Clausing, this time co-authored with Maurice Obstfeld. «Tariffs are applied to imported goods, which in 2023 totaled 3,1 trillion dollars. The income taxes, instead, apply to incomes, which exceed $20 trillion. Currently, the U.S. government collects approximately $2 trillion from individual and corporate income taxes. It is literally impossible to completely replace income taxes with tariffs. Tariffs would have to be incredibly high on such a small base of imports to offset the income taxes, and as rates rise, the base itself would shrink as imports fell, making Trump's $2 trillion goal unattainable." While economic issues have always been crucial to determining the vote of the American electorate, for Donald Trump the path of tariff policy could become in the last weeks of the election campaign a thorn in the side if well ridden by the spin doctors of the Democratic camp.
