SAN FRANCISCO (KCBS RADIO) – Wednesday marks the start of what President Donald Trump has called “Liberation Day” – that is the kickoff of new tariffs on goods coming into the country.
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“This is the beginning of ‘Liberation Day’ in America,” Trump said during an address last week in which he announced 25% tariffs on all cars not made in the U.S. “We’re going to take back just some of the money that has been taken from us by people sitting behind this desk – or another desk that’s not quite as nice but… they have their choice of seven, as you know – and we’re going to charge countries for doing business in our country and taking our jobs, taking our wealth… taking a lot of things that they’ve been taking over the years.”
Trump has also said “it all becomes reciprocal,” on April 2 regarding tariffs. That is a reference to his plan to charge the same amount in tariffs that other countries charge the U.S.
While the president has said his tariff plan should bring more businesses, jobs and money to the U.S., some experts are concerned these new taxes might have a negative impact on the economy. KBCS Radio political analyst Mark Sandalow explained some of these concerns this week. He noted that Peter Navarro, Trump’s trade advisor, has claimed that the tariffs will bring in $6 trillion over the next 10 years.
“That would be remarkable,” Sandalow said. “That would $600 billion every year.”
However, he noticed a snag in the theory.
“The scary part, and the reason the markets partly tanked last week and are going to continue to go down this week, is because Trump keeps saying other countries are paying the $6 trillion – if it’s really that much,” explained Sandalow. “But other countries don’t pay a penny in tariffs or taxes. Tariffs are taxes on imports. The people who pay those are the people who import the goods. Now they might just say, we’ll just take $6 trillion less in profits, but almost certainly those costs get put onto the consumer.”
Sandalow said that if you divide $600 billion per year by the number of people in the nation, it comes out to around $18,000 per person.
“This would constitute the largest tax increase in American history – or at least if you look at it as a proportion of our GDP, which is the way most people look at – the largest since World War II,” he said.
Furthermore, Sandalow said wisdom from economists also seems to contradict the benefits Trump is touting related to the tariff plan. He used economist Milton Friedman of the Chicago school of economics as an example.
“I mean, it was the very conservative Nobel Prize winning economist Milton Friedman who said: tariffs do protect consumers very well against one thing... it protects consumers against low prices,” Sandalow said.
He also explained that tariffs could also have an impact on prices beyond just the goods coming from our major trade partners.
“Things like insurance rates, which shouldn’t be tied to tariffs are directly tied to tariffs,” he said. “That’s because… let’s say you’re driving – whether it’s a Chevy or Toyota – and it breaks down, and you need a new part. That part is almost certainly imported or at least pieces of that part are imported from Mexico or from China or from Canada and as a result if the prices of those parts go up insurance companies are going to pay more for collisions. That means everybody’s insurance rate is likely to go up.”
If this all seems risky, Sandalow did mention that some believe Trump is using the tariffs more as a negotiation tactic than an actual way to drive revenue. In that scenario, the end goal would be for the countries facing tariffs to agree to his policies. However, as the clock ticks by, it seems clear that the tariffs are going to become reality.
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