10% Universal Tariff Would Cost US Consumers $300 Billion, Analysts Say
Analysts from the Tax Foundation and from the Center for Strategic and International Studies said that hiking tariffs on all imports by 10% would not boost domestic manufacturing, with CSIS's Bill Reinsch noting "you would be hard pressed to find an economist who thinks they make any sense."
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The 10% universal tariff -- a back-of-the-napkin idea from former President Donald Trump -- would add more than $300 billion in tariffs, since the U.S. imported about $3.2 trillion in goods in 2022, the Tax Foundation's Erica York wrote.
Reinsch wrote that the tariff "would add significantly to inflation, raising the price of most everything, since domestic producers of competing goods would almost certainly take advantage of the situation by raising their prices as well." Businesses would also be affected because their imported parts "would become more expensive, leading to price increases on their finished products and making them less competitive globally," he wrote Aug. 28. "Harder to quantify but nonetheless certain is the impact of the inevitable retaliation on U.S. exports."
But Reinsch also noted that "there are many steps before it could actually happen -- Trump would have to win the election, take office, develop a more detailed proposal, and figure out a legal way of implementing it (Congress would no doubt have something to say about that)."
York tried to quantify the impacts, and modeled that the U.S. economy would be 0.7% smaller only considering the effect of the tariffs and would have 505,000 fewer jobs.
If other countries imposed 10% tariffs on all American goods -- about $2 trillion last year -- that would reduce GDP by another 0.4% and cost about 320,000 jobs, the foundation estimated.
York cited Indiana University economist Ahmad Lashkaripour, who also projected a 1.1% drop in the U.S. GDP. (In comparison, the Great Recession saw a 4.3% decline over about a year and a half.)
However, Reinsch said, tariffs do serve a use, and said the Section 301 tariffs on Chinese cars are protecting domestic auto manufacturing.