Former President Donald Trump loves tariffs. He absolutely goes nuts for them and has made an even sharper turn back to protectionist policies a major part of his campaign. He also has no idea how tariffs work or what function they perform and doesn’t understand how his proposed policies would pile higher costs on American consumers already frustrated with rising inflation. That’s why it’s confounding that voters somehow trust Trump to bring down prices.
Trump’s latest love letter to tariffs came early in a lengthy interview with Time magazine reporter Eric Cortellessa. For months now, he’s floated a potential 10% tariff across the board on all imports. In other words, companies that are importing goods from places like Mexico or China would need to pay 10% of their cost to the U.S. Treasury Department. Now, though, he says the actual amount under his watch could be even higher:
Cortellessa: When you say more than that, though: You mean maybe more than 10% on all imports?
Trump: More than 10%, yeah. I call it a ring around the country. We have a ring around the country. A reciprocal tax also, in addition to what we said. And if we do that, the numbers are staggering. I don’t believe it will have much of an effect because they’re making so much money off of us. I also don’t believe that the costs will go up that much. And a lot of people say, “Oh, that’s gonna be a tax on us.” I don’t believe that. I think it’s a tax on the country that’s doing it. And I know.
No, he doesn’t know, which is truly impressive for someone who has arguably been in charge of U.S. economic policy. Contrary to his long-standing belief, tariffs are paid by the importers as the goods enter the U.S., not by the exporting country. As my colleague Ryan Teague Beckwith noted last month, the choices that American businesses presented with such a steep tariff would face are clear: “What are you going to do: pay the cost out of your own coffers, hurting the company’s bottom line, angering shareholders and possibly losing your job as a result? Or just raise prices 10% to cover the cost?” The answer is the latter, bumping up prices that have already risen sharply in the aftermath of the Covid-19 pandemic.
Cortellessa tried to press Trump about whether he’s comfortable with the inflation that would come with those tariff increases, something Trump denied would happen before pivoting off into a semi-related tirade. The reporter tried again, asking directly whether he thinks businesses would pass on the costs to consumers. “No, I think what happens is you build,” Trump responded. “What happens to get out of the whole situation is you end up building, instead of having your product brought in from China, because of that additional cost, you end up making the product in the United States.”
That’s probably the most cogent answer Trump could have given to that question. That answer also happens to be extremely incorrect, as the costs of “building” would still be passed on to the consumer. Taken together, the net effects of his tariff plan would raise prices to the tune of more than $300 billion per year, according to an estimate from the Tax Foundation, a nonpartisan Washington think tank.
For a former president to be so stubbornly wrong about an Econ 101 concept is bad enough. What makes Trump’s lack of basic economic understanding truly maddening, though, is how little it’s reflected in public polling. A recent NBC News poll found that Trump holds a 22-point lead among registered voters when asked whether he or President Joe Biden would be better at dealing with inflation and the cost of living. (It’s worth noting that this question was presented to 420 respondents, a smaller subset of the full 1,000-person poll.)
What makes Trump’s lack of basic economic understanding truly maddening, though, is how little it’s reflected in public polling.
Another survey last month from CNBC found similar results: 54% of respondents said Trump would do better on inflation, compared with 27% who gave the edge to Biden. On one level, Trump is most likely benefiting from a bit of unearned nostalgia for his time in office. After 3½ years with Biden in the White House, it’s easier for voters to tell themselves that someone else would be able to handle things better, even as most of the power to reduce inflation falls under the Federal Reserve’s purview. Even that is something that Trump has suggested the president take over, having all but demanded that the Fed’s chair follow the White House’s lead when he was in office.
But most major economists agree that Trump’s proposed economic policies would absolutely lead to higher costs. “Most of the major policy initiatives being suggested by Donald Trump’s campaign would be inflationary; whether it’s narrowing the trade deficit via tariffs or a dollar devaluation, curbing immigration or, now we learn, compromising the Fed’s independence,” Paul Ashworth, chief North America economist for London-based Capital Economics, wrote in an analysis published Monday.
Biden and other Democrats have begun to craft their messaging to highlight the absurdity of Trump’s policies and the economic pain they would cause. He’s also taken to calling out corporate greed for rising costs and the tax cuts for the wealthy that Trump signed into law. Unfortunately, trying to sway voters is about the best he can do to try to protect them from the damage that Trump would unleash. Because as his Time interview showed, once someone like Trump has dug in his heels, he remains committed to even the worst ideas, no matter how much evidence there is to show he’s nowhere close to being right.