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NextImg:Trump talking more tariffs than ever despite political and practical headwinds - Washington Examiner

Donald Trump is keen on ushering in a dramatic expansion of federal tariff policy, even if there isn’t much of an appetite for it politically.

This week, the former president visited Capitol Hill for the first time since he was in office to meet with Republicans and top business leaders. During a closed-door meeting with GOP lawmakers, he further pushed for massively increasing tariffs despite Republican reticence regarding such a move and questions about its feasibility.

During the confab, Trump floated the idea of reducing the income tax and replacing it with tariffs, according to attendees. Trump, who is the presumptive Republican nominee to face President Joe Biden in November, has previously tossed around the idea of 10% across-the-board tariffs — a move that opponents claim would be an indirect tax increase on consumers and would be politically and practically challenging.

Peter Loge, director of the George Washington University School of Media and Public Affairs, said that rather than a firm policy proposal, the tariffs idea represents Trump’s effort to tap into working-class anger and frustration with the economy.

Typically, calls for raising tariffs have come from Democrats in manufacturing states. This election cycle, though, Trump has dialed up the populism even more than during his first term, which saw the imposition of several new tariffs.

“Trump is more interested in getting votes and getting elected than he is in being ideologically consistent or pure,” Loge told the Washington Examiner. “This is less a policy and more a metaphor. This is a way of saying, ‘I hear you. This is unfair, I’ve got you.’”

Many Republicans on Capitol Hill would have massive heartburn supporting such tariff proposals. When asked about Trump’s trade policy on the campaign trail, they might reframe it in the sense that they are working to find ways to help the American worker and rebuild manufacturing, according to Loge, who has also worked in Democratic politics.

The political reality, though, is a different story given the practical matters at play. For one, raising tariffs to the degree Trump proposed would not come close to paying for or replacing income taxes.

Last year, the individual income tax generated some $2.2 trillion in federal tax revenue, while the U.S. imported $3.1 trillion in goods. The conservative National Taxpayers Union predicts that it would take a 71% effective tariff rate to generate that same $2.2 trillion in tariff revenue. The group called the notion of supplanting income taxes with tariffs a “fantasy” and “impossible.”

The left-of-center think tank Center for American Progress found that Trump’s 10% tariffs would squeeze consumers because companies would pass the costs on to them. It would end up being a $1,500 annual tax increase for the typical household.

“Replacing the income tax as it is now with tariffs is just not feasible,” Erica York, a senior economist at the Tax Foundation, told the Washington Examiner. “There’s no way to make up the $2-plus trillion in annual revenue that the income taxes raise with customs duties.”

The Tax Foundation, which generally prefers lower taxes, estimated that the Trump 10% tariff plan would shrink the U.S. economy by 1.1% and threaten more than 825,000 U.S. jobs if trade partners retaliated in kind.

In general, it would be tough for Trump, if he wins the election, to rely on Congress to help with his tariff agenda. Democrats would be reluctant to help hand Trump a policy win, and there would likely be too little support for such a dramatic change in trade policy from Republicans.

Trump is at odds with many free-trade proponents in his party, although Republicans, led by Trump’s populist appeal, have increasingly become more open to tariffs. Proponents see it as a way to reshore jobs and rebuild the country’s manufacturing base.

House Speaker Mike Johnson (R-LA) told Punchbowl News after the remarks that Trump made the comment about tariffs “with a smile.” Johnson also added, “I’m not suggesting this is the plan.”

Loge characterized such a tectonic shift in tariff policy as “a political nonstarter.” He also said large numbers of voters aren’t likely to shift toward Trump over his tariff vision.

“Republicans are going to vote for Republicans and Democrats are going to vote for Democrats, and it’s going to come down to abortion, it’s going to come down to threats to democracy, things like that,” Loge said.

York noted that there has indeed been an increased inclination toward protectionism in both parties, but that is still being constrained for the most part by a desire to provide protection for relatively small sectors of the economy — not across the board. For instance, politicians on both sides favor safeguarding supply chains for semiconductor chips that are critical to the country’s defense.

“This proposal goes way beyond that and just blanket tariffs on everything. I don’t think there would be political support for that,” she said. “The economic ramifications of something like that would just be astounding.”

York said that “politically, economically, even administrability-wise,” enforcing the tariffs would be unworkable.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

During Trump’s first term in office, he used rarely used parts of trade law to impose tariffs. His actions led some in Congress to discuss revoking that executive authority over tariffs — and those were mild compared to the expanded tariff policy that Trump has floated.

“So if we were in a situation where the executive was heavily abusing or creatively using these tariff authorities to do universal tariffs … I do think we would see a stronger push to pull that authority back,” York said. “But bigger picture, I would question the legal authority to do something this dramatic.”