WASHINGTON — President Donald Trump on Wednesday gave America its largest tax increase in at least three decades — more than $2 trillion over 10 years — by imposing an across-the-board 10% levy on all imports, with higher rates on dozens more countries and a further 25% tax on all foreign cars.
“Foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream,” Trump said at a chilly, overcast ceremony in the White House Rose Garden attended by most of his Cabinet and hundreds of invited guests.
“Our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” he said.
The 10% rate is half of the 20% Trump had spoken about on the campaign trail, but nevertheless will cost American importers about $2.1 trillion in additional taxes over the next decade, costs that are passed along to consumers, according to a Tax Foundation estimate.
Erica York, the group’s vice president of federal tax policy, said the total will be greater than that because of the higher tariffs charged to some countries.
That would make Trump’s tax hikes larger than the three that have been perennial targets of Republican wrath through the years: Republican George H.W. Bush’s increases of 1990, Democrat Bill Clinton’s in 1993, and Democrat Barack Obama’s in 2010 to pay for the Affordable Care Act.
Trump, by invoking emergency powers, is going around Congress to impose the tariffs. He has created a base 10% tariff but is taxing imports from many countries more, based on how those countries tax American imports. For example, imports from European Union nations will be taxed at a 20% rate because Trump’s advisers claim its tariffs and “currency manipulation and trade barriers” amount to a 39% tax on American goods going into the EU.
But while Trump and his aides claimed these tariffs were “reciprocal” ― merely matching the tariffs charged on U.S. imports by the country in question ― in reality, the rates were an arbitrary calculation of a country’s balance of trade with the United States.
“The trade deficit that we have with any given country is the sum of all trade practices, the sum of all cheating,” a Trump aide told reporters on condition of anonymity on a conference call just before Trump’s speech.
It’s unclear how precisely imports from Canada and Mexico — the two other signatories in the United States’ biggest free trade agreement — will be treated. Trump had imposed 25% tariffs on goods from those nations, supposedly to punish them for allowing fentanyl to be smuggled into the U.S., but then delayed implementation for a month. The order Trump signed Wednesday says that it excludes products “compliant” with the trade agreement but did not offer definitions.
In his rambling remarks lasting nearly an hour, Trump hailed his new tariffs as “Liberation Day” for the country and once again repeated his false claim that foreign countries, rather than Americans, would be paying the new tariffs.
“We took in hundreds of billions of dollars from China in tariffs,” Trump said. “I took in hundreds of billions of dollars in my term, hundreds of billions. They never paid ten cents to any other president, and yet they paid hundreds of billions.”
Trump was told repeatedly by his own economic experts during his first four years in office that U.S. tariffs are paid by American importers, meaning the tariffs on Chinese goods he boasted about were coming out of the pockets of American consumers.
Whether he is intentionally lying or truly believes that he is correct and all his experts were wrong is unknown, but he has continued with that falsehood to this day.
In reality, tariffs are merely taxes imposed on imported products. When goods arrive at a U.S. port of entry, the importer — sometimes a private individual but more often a manufacturer, a wholesaler or a retailer — is required to pay to U.S. Customs the import tax due before the goods are released into the country. That expense is then added into the production cost of the goods, which is ultimately paid by the American consumer in the form of higher prices.
Whether Trump understands how this works is unclear, even though his businesses often purchased both raw material and finished goods from other countries, including China.
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On Tuesday and in the wee hours Wednesday, Trump wrote social media posts in which he suggested that tariffs imposed on Canada would somehow raise the price of fentanyl being brought into the United States — even though drug smugglers are not known to declare their illegal contraband at customs in order to pay the duty.
“Our critical Tariffs on deadly Fentanyl coming in from Canada,” Trump wrote Tuesday, and then just after midnight Wednesday, he added that he was “Tariffing the value of this horrible and deadly drug in order to make it more costly to distribute and buy.”
White House officials did not respond to HuffPost queries about what, exactly, Trump was trying to say.
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