President Donald Trump’s tariffs are making us poorer.
A new set of tariffs against Chinese goods took effect last week. Despite Trump’s insistence that the burden of his trade restrictions are borne by foreign countries, economic research tells us tariffs are effectively taxes passed on to the American people through higher prices.
Along with previous rounds of tariffs, about two-thirds of consumer goods imported to the United States from China are now subject to higher taxes imposed by the Trump administration. That amounts to about $1,000 in additional annual spending for an average American household, according to a recent analysis by J.P. Morgan.
If you’re keeping score, note that Trump’s tariffs have whittled away almost all the benefits of the Tax Cuts and Jobs Act he signed in 2017. Last year, the Republican tax reform package saved an average American household about $1,200, or about $900 for an average middle-income household, according to the Tax Policy Center.
Of course, these are all averages, and each individual’s specific figures will vary widely based on their tax situation and spending habits.
But supposing you are an average American, what could you buy with the $1,000 Trump’s China tariffs could cost you over the coming year?
• About 60 large Midwest Mystery Pizzas from Casey’s, featuring pulled pork, corn and bacon.
• Forty-three “Tupac for governor” shirts from Raygun in Des Moines.
• More than 200 48-ounce containers of ice cream from Blue Bunny in Plymouth County.
• One 16A1 rifle from Brownells in Poweshiek County, a replica of the M16A1 issued to U.S. armed forces during the Vietnam War, currently marked down from about $1,400.
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• A year’s worth of books and supplies for a University of Iowa student, per the university’s estimate.
• Two sets of season tickets for Iowa Hawkeyes football.
• One week of meals for 40 families through a donation to CommUnity Food Bank in Iowa City.
• About two-thirds of the median Iowa homeowner’s annual property tax burden.
• At least four ounces of illegal marijuana, based on estimates from the price-tracking website Budzu.
• Seventy-seven large bottles of Hawkeye Vodka.
• About 1,800 cans of Busch Light, at $17 per 30-pack.
Perhaps some of those items seem trivial. Most of us can make do with fewer pizzas, football tickets and cans of beer.
However, poor Americans are paying a steeper price for tariffs than middle-income and high-income families.
Low-income households tend to dedicate a higher portion of their resources to imported goods. Americans in the lowest 10 percent of earners see their after-tax income drop 1.5 percent as a result of tariffs, according to a 2017 study by the Center for Economic and Policy Research. The top half of earners are affected by less than half a percentage point.
The study concluded that tariffs function as a regressive tax, and they impose the heaviest burden on women and single parents. These are also the families least likely to have benefited from the 2017 tax cut legislation, since their federal tax burdens were already small.
For families already struggling to make ends meet, a slight uptick in the cost of consumer goods can have a significant impact — fewer groceries, no new clothes or inadequate school supplies, as a few examples.
As Trump’s trade war trudges along with no achievable mission, the Iowans who can least afford it are stuck with the bill.
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