Harris slams tariffs as 'Trump sales tax.' Here's the real impact on consumers.

By Chris Matthews

Economists say the proposal would raise prices by upwards of $3,900 per year for a middle-class family

Vice President Kamala Harris characterized former President Trump's plan to institute new tariffs on products Americans buy from abroad as a "Trump sales tax" that would increase costs for everyday products during Tuesday night's debate.

The Republican candidate pushed back on the characterization of import tariffs as a tax on American consumers, arguing instead that tariffs are paid by foreign countries.

Economists say that the impact of tariffs can be complex and depend on the dynamics of the markets for the products being taxed.

Alex Durante, economist at the conservative Tax Foundation wrote in an analysis that U.S. businesses are responsible for paying import taxes to the federal government when it institutes a tariff.

"The economic burden of the tariffs, however, could fall on others besides the U.S. business directly paying the tax, including foreign businesses selling goods to U.S. businesses (if foreigners lower their prices to absorb some of the tariffs), or U.S. consumers ultimately purchasing the goods (if U.S. businesses raise their prices to pass on the tariffs)," he added.

Historically, foreign firms have absorbed some of the cost of tariffs, but studies show that the recent Trump tariffs "have been passed almost entirely through to U.S. firms or final consumers," Durante said.

Trump argued that the Harris' attacks on tariffs are disingenouous because the Biden administration has not only kept the tariffs he put in place, but placed new tariffs on goods like Chinese electric cars.

Indeed, Biden has drawn criticism from supporters of free trade for maintaining the Trump tariffs, and Durante stressed that the price impact of these tariffs were not significant on an economy wide basis.

"Ultimately, tariffs raise prices for American consumers, but they aren't the primary culprit for recent surges in inflation," he wrote. "Nonetheless, a repeal of them would be a directional improvement."

Trump is now proposing across-the-board tariffs on all imported goods of up to 20%. The scale of this proposal is far greater than anything he did in his first term, or which has been attempted by prior presidents.

That's why economists predict the impact of these new taxes will be far greater than what was experienced during the former president's first stint in the White House.

Harris cited a study by the left-leaning Center for American Progress estimating that an import tax of that scale would increase costs for the typical American family by $3,900 per year.

That's at the high end of economists estimates for the impact of these levies on consumers.

The Peterson Institute for International Economists estimates the cost would be $2,600 for middle-class families, while the Brookings Institution calculated that a 10% tariff would reduce family income by $1,800 per year.

"High tariffs also imply a massive shifting of the tax burden from richer taxpayers toward lower-income Americans," wrote PIIE tax expert Kimberly Clausing in an August analysis of the Trump plan. "Households in all quintiles lose net income from such high tariffs, but the losses are greatest for those at the bottom of the income distribution."

-Chris Matthews

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09-11-24 1206ET

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