Sorry, Kamala: Trump’s Tariffs Aren’t a Tax. They’re a Lifeline for the Middle Class | Opinion

On Tuesday’s presidential debate, Vice President Kamala Harris went right after former President Donald Trump’s proposal to increase tariffs if elected president in November, calling it a “sales tax on the middle class.” It was a reiteration of what she said at the Convention, that economists say people will pay $4,000 more for imported goods if Trump put a 10 percent tariff on non-free trade nations.

The only problem is, it’s nonsense.

The foundational argument that tariffs are a tax has three sources: A spring paper by the Peterson Institute for International Economics was followed by 16 Democratic Party linked Nobel Prize winning economists writing a note to who-it-may-concern that Trump’s tariffs would be an economic disaster, which was then followed by a report by the Tax Foundation alleging that GDP would fall by 0.2 percent if Trump had his way—not a huge fall, as it happens, as economies rise and fall by that number every quarter for a variety of reasons.

Indeed, for protecting U.S. industry from deindustrialization, that is a very small price to pay—something President Biden himself seems aware of. In one of his smoother comebacks of the debate, Trump reminded Harris that the Biden White House, where she currently works, not only extended the Section 301 tariffs imposed in the Trump years, but also increased tariffs on a number of China-made goods. Tariffs were raised on China made EVs, EV batteries, solar and certain types of semiconductors. Despite this increase, of course, inflation has not moved higher.

But there’s a difference between Trump’s tariffs and Biden’s: “I had tariffs and almost no inflation,” Trump said on Tuesday night.

And that’s mostly true: Around 2019, inflation did rise slightly above the Fed’s target rate, but it was still under 3 percent. Inflation hit a high of 2.9 percent in June 2018, the first few months after the China tariffs began. But then in June 2019, the 12-month rolling inflation rate fell to 1.9 percent. When COVID-19 hit, everything went haywire due to lockdowns, record stimulus and money printing, sending inflation in June 2022 to 9.1 percent.

Trump’s record on this matters, because tariff impacts are tough to predict. Economists run the numbers through vast software models, and the outcome depends on the data points they input in the model.

But Trump’s record speaks for itself. In March 2023, the International Trade Commission did a model study on steel tariffs and China tariffs. They found that tariffs led to more investment and production domestically and shifts in supply chains out of China. And where prices did rise on around 12 items the report looked at, import prices rose roughly 10 percent of the tariff price. That means a 20 percent tariff on $100 may have increased the import price not by $20, but by $2.

On commodity items like steel, supply and demand impacts the price. We have tariffs on solar, but solar prices are at historic lows. If the Chinese currency weakens against the dollar (it’s down around 8 percent since 2018), that cuts into the tariff.

We at the Coalition for a Prosperous America did our own study and our model showed a 10 percent universal tariff could generate $263 billion in revenue, which could be used to provide a substantial $1,200 tax refund to lower-income households and refunds of 3-4 percent of income for middle-income households.

The truth is, most of us are seeing price increases in things we don’t import—insurance and internet, streaming services, and food. That’s where your $4,000 is going.

Don’t believe the spin of the global economists Harris is quoing. Tariffs will be great for the middle class.

Kenneth Rapoza covered the BRICS for Forbes from 2011 to 2023. He is an industry analyst with the Coalition for a Prosperous America.

The views expressed in this article are the writer’s own.