Behind Trump’s Proposed $4,000 per Household Tax Increase

President Trump has proposed a new 10 percent tax on Americans who import goods from abroad combined with an additional 60 percent tax on Americans who import goods from China.

Based on 2022 imports, this would represent an ongoing tax increase of $495.7 billion per year, the equivalent of $3,942 for every American household.

Trump’s tax would be especially punishing for American manufacturers. More than half of U.S. imports from China and the rest of the world consist of intermediate inputs and capital goods like machinery used to make things in America.

Trump’s tax would also hit American farmers and ranchers. History shows that other countries respond to U.S. import-tax hikes by retaliating against our own agricultural exports.

And his massive 60 percent tax on Americans who buy goods assembled in China would hit families who buy things like cell phones ($48 billion in imports from China in 2022), toys ($39 billion in imports from China in 2022), and shoes and clothing ($37 billion in imports from China in 2022).

Multiple studies have shown that the burden of import-tax increases like those proposed by President Trump falls on American taxpayers, consumers, and businesses. Politicians who claim that import taxes are paid by other countries appear to be either ignorant of the facts or intentionally deceptive.

As the U.S. International Trade Commission’s comprehensive analysis of recent import-tax increases concluded: “The report finds that on average from 2018 to 2021, U.S. importers bore nearly the full cost of these tariffs because import prices increased at the same rate as the tariffs.”

It would be challenging for President Trump to impose a tax hike of this magnitude without congressional approval. The Constitution gives Congress control of international commerce and duties. However, when in office the Trump administration managed to double U.S. import taxes without a single congressional vote, so anything is possible.

Note that these tax-increase estimates are calculated by applying President Trump’s proposed tax hikes to 2022 imports, everything else being equal. If a massive tax increase reduced imports, then the annual import-tax increase would be lower. But the overall costs would be much greater than simply the import-tax value, which does not account for the cost of foreign retaliation, supply chain disruptions, reduced investment flows to the United States, and other inevitable consequences. There can be no doubt that President Trump’s proposed tax hike would be incredibly costly for American manufacturers, agricultural producers, and families.

For additional background, see Erica York, Tariff of Abominations Redux: Trump Proposes 60% Tariff on Chinese Goods.