President Donald Trump and his MAGA cheerleaders — including Commerce Secretary Howard Lutnick and longtime trade advisor Peter Navarro — are touting tariffs as an excellent source of revenue for the United States. But many economists, from right-wing disciples of the late Milton Friedman to liberals like Paul Krugman and Robert Reich, are warning that Trump’s steep new tariffs will be a major hardship for U.S. businesses and consumers. Everything from fruit and vegetables to electronics to construction materials, economists warn, will soar in price in the months ahead.
CNN’s Elisabeth Buchwald examines economists’ negative view of tariffs in an article published on August 6. The main focus of Buchwald’s piece, however, is the ways in which revenue from Trump’s tariffs might be spent.
“Hardly a day goes by without President Donald Trump boasting about the record tariff revenue the U.S. government has been collecting since he ratcheted up taxes on almost every imported good,” Buchwald observes. “‘We have a lot of money coming in, much more money than the country’s ever seen,’ Trump said over the weekend, referring to tariff revenue. Trump’s right: The U.S. government collected nearly $30 billion in tariff revenue last month, according to the Treasury Department. That’s a 242 percent jump in tariff revenue compared to last July…. So what exactly is the government doing with all this money?”
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Buchwald continues, “Trump has floated a combination of two options: paying down the government’s multi-trillion debt and sending ‘tariff rebate checks’ to Americans.”
Tariff revenue, the CNN reporter notes, isn’t enough to wipe out the United States’ $36 trillion federal deficit but could “shrink” it.
Buchwald points out, however, that even though “tariff revenue may help the government’s financial situation on paper,” it is “not necessarily coming pain-free.”
Ernie Tedeschi, director of economics at the Budget Lab at Yale University in Connecticut, told CNN that “tariffs are going to have a negative economic effect on the American economy” and will decrease gross domestic product (GDP).
According to Tedeschi told CNN, “That’s going to partly but not fully offset the amount of revenues that we raise from tariffs. Because if your economy is growing less than you thought, then, yeah, you raise this tariff revenue, but maybe you raise a little bit less in income taxes and payroll taxes as a result.”
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Read Elisabeth Buchwald’s full article for CNN at this link.