A $6 Trillion Trump Tax Increase?
S E E D E D C O N T E N T
Financial markets have the shakes as President Trump prepares to launch his next big tariff salvo on Wednesday. And nerves are appropriate since Mr. Trump’s chief trade adviser, Peter Navarro, is boasting about what he says will amount to a $6 trillion tax increase from the tariffs.
“Tariffs are going to raise about $600 billion a year, about $6 trillion over a 10-year period,” Mr. Navarro told Fox News on Sunday. This is on top of $100 billion a year from Mr. Trump’s car and truck tariffs. He also tried to claim that “the message is that tariffs are tax cuts.”
George Orwell, call your office. In the real economic world, a tariff is a tax. If you raise $600 billion more a year in revenue for the federal government, you are taking that amount away from individuals and businesses in the private economy.
By any definition that is a tax increase, and the $600 billion figure would be one of the largest in U.S. history. It amounts to about 2% of gross domestic product, and it would take the federal tax share of GDP above 19%. The average since 1975 is about 17.3%. Democrats, who love tax increases, haven’t dared pass such a large revenue heist.
It’s possible Mr. Trump will walk back from this tax ledge, and Kevin Hassett, who runs the White House economic council, wouldn’t say on Sunday what Mr. Trump will do.
But what is clear is that the President is going to impose significant tariffs, and do so when the economy is slowing. The Atlanta Federal Reserve’s GDP Now estimate for the first quarter, which ended Monday, has the economy shrinking 0.5%. That volatile number will change as March data arrive, but both consumers and businesses have grown more cautious as they worry about the effect of tariffs.
This is especially worrying because the signs are that Mr. Trump thinks tariffs are worth the economic damage. The latest evidence is his weekend claim that he doesn’t give a hoot if prices rise on foreign cars. “I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars,” Mr. Trump told NBC News. “I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty.”
Somehow we doubt American consumers will feel the same at a dealer showroom. Mr. Trump’s 25% tariff on foreign cars, which goes into effect this week, will raise car prices by some amount. Foreign car makers might absorb some of the tariff cost, but some part of the 25% levy is sure to be passed on to American consumers.
Mr. Trump also ignores that U.S. car makers are also likely to raise their prices. If Hyundai raises the price of an export model made in South Korea, then Ford and GM may at first try to capture market share. But over time the U.S firms would be foolish not to raise their prices to increase profits, perhaps by some margin less than the increase on imported cars.
That’s what happened after Mr. Trump raised tariffs on washing machines in his first term. Washer prices rose nearly 12%, according to a 2019 study, and it didn’t matter where the machine was made.
As a political matter, Mr. Trump’s “I couldn’t care less” quote about price increases is likely to show up in Democratic campaign ads next year. Polling shows most voters don’t think Mr. Trump is focusing enough on reducing prices—64% say not enough in the CBS News survey released Sunday. Mr. Trump won’t be on the ballot in 2026, but you can bet TV ads will link Republicans in Congress to Mr. Trump and those comments.
The President’s ideological fixation on tariffs is crowding out rational judgments about the consequences. Americans are being told to accept the pain of higher prices, a slower economy, and shrinking 401(k) balances in the name of Mr. Trump’s project to transform the American economy into what he imagines it was like in the McKinley era of the 1890s.
We wonder if the working-class voters who are supposed to be the vanguard of the new GOP will feel as good about the pain as they try to make ends meet paycheck to paycheck.
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Sense and Sensibility has creeped into the WSJ? Damn, the Woke Street Journal! What's an ink stained republican supposed to read now, the Trotskyist musings of a Steve Bannon?
whatever maga rag trumpski-ites choose to read now, you can bet it'll have plenty of spelling errors ...
Do you really believe MAGA's "READ"????
Mostly the New York Post, it's 'shock' full of pictures.
The era of McKinley was robber barons. I don;t think it was the gilded age that some imagine it to be. The working class was still very poor
Trump is probably picturing Frederick Douglass face timing with Diamond and Silk on his iPhone.
I really hope that republicans running for another term in the house/senate open their eyes and see what's happening and start backing away from him. But they are going to have be active participants in controlling the president. And that means no more carte blanche!
I wonder what the GDP was during the McKinley era... hmmmmm
And....
The current GDP was about $29 Trillion ($29,000 Billion). Divided between 228 million individuals of working age means that the average output of the American worker in 2025 was more than $127,000.
The estimated GDP in 1900 adjusted to 2025 dollars is somewhere about $800 Billion. Divided by the working age population (anybody above 10) 45 million means that the average output of the American worker was less than $18,000. Sooooo...
What does this prove?
Not much, because the country has changed a lot, and we cannot somehow re-create the same conditions that existed in this so called "Golden age". Americans are much, much better off now than we were then. We don't need some fool who thinks that he can hide his tax increase in an economy-crushing tool of the 19th Century. This ain't then and things are much different in a myriad of ways. Go forward, not backward.
Well we've arrived. Not only is the right wing as stupid as the left wing, they are now the exact same kind of stupid.
The idea that taxing behaviors will generate $X in revenue always ignores the basic facts that A) the existence of the tax suppresses the behavior in question and B) the people writing the tax code are about 1/1000th as smart as the people circumventing the tax code.
This is true of tariffs, but it's also true of taxation on stock trades, estate tax, massive income tax, or any other Bernie ideas.