President Trump's tariffs are reversing the 2017 tax cuts for many middle-income households.
the per-household cost, in form of tariff-driven price increases, will range between about $500 and $1,000—depending on how the tit-for-tat trade war between the US and China plays out. The mid-point of its projection is roughly equal to the average TCJA tax cut for a middle-income household. And it is nearly twenty times the average tax cut for a low-income household.
But tariffs boost prices of more than imported goods. In many cases, competing domestic producers respond to those price hikes by opportunistically raising their own prices. If competition or declining demand prevents firms from raising post-tariff prices, their shareholders and workers bear the burden of those higher import taxes.
Oxford estimated the effects of prior 10 percent Trump tariffs on China, the recently announced 25 percent import taxes on some Chinese goods, and that nation’s retaliation against the US. For the outer bound of its forecast, it assumed that Trump eventually would impose his 25 percent tariffs on all Chinese imports, including those now subject to the 10 percent levy. And that China would retaliate in kind.
Funny thing: Public opinion surveys showed most Americans thought they got no benefit from the TCJA’s tax cuts. Turns out, they may have been right—at least when those tax cuts are paired with the Administration’s trade policy. I am a senior fellow at the Tax Policy Center as well as an analyst on aging and retirement policy. I'm the author of the book"Caring for Our Parents." I am author of the book"Caring for Our Parents" and resident fellow at The Urban Institute, where I am affiliated with the Tax Policy Center and the Program on Retireme...
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