Whose Tariffs Are Worse For The American Consumer?
Summary
TLDRThe transcript covers a debate between President Joe Biden and former President Donald Trump on tariffs. Trump defends his tariffs, citing their benefits for domestic industries, while Biden maintains some of Trump's tariffs, despite earlier promises to remove them. Both leaders' policies focus on protecting U.S. industries, though Trump's approach is broader and more aggressive. The script highlights the economic consequences of tariffs, including higher prices for consumers and potential trade retaliation. It also discusses the political appeal of tariffs, despite their questionable impact on jobs and inflation.
Takeaways
- 💼 Trump's proposed 10% tariffs on all imports could cost U.S. consumers over $300 billion annually.
- 📈 Tariffs act as a hidden tax on American consumers, increasing the cost of goods domestically.
- 🤝 Despite differing policies, both Biden and Trump support tariffs, though Biden's tariffs are more targeted.
- 💸 Tariffs imposed during the Trump administration have cost U.S. consumers through higher prices, and Biden has largely maintained these tariffs.
- 🇨🇳 Both Trump and Biden target China with tariffs, although Trump's tariffs are more broad-reaching while Biden focuses on specific sectors like steel, aluminum, and electric vehicles.
- 📊 Studies show that almost 100% of the tariff costs are passed on to U.S. consumers, increasing inflation.
- 🇺🇸 Tariffs are often presented as a tool to protect domestic industries but have led to unintended economic consequences like higher consumer prices and reduced output.
- ⚖️ The Biden administration’s recent tariffs are said to avoid contributing to inflation, but critics argue otherwise, citing historical examples like tariffs on steel, aluminum, and tires.
- 🛑 Economists argue that tariffs could lead to retaliatory actions from other countries, potentially shrinking the global GDP by 7% and harming American manufacturing.
- 💼 The political appeal of tariffs remains strong as a way for leaders to claim they are protecting U.S. jobs, but many experts believe they ultimately hurt consumers and workers.
Q & A
What are tariffs and how do they affect consumers?
-Tariffs are taxes on imported goods or services from another country. They often result in higher prices for consumers, as companies pass the cost of tariffs onto them by increasing product prices.
How did Trump's tariffs affect U.S. consumers during his presidency?
-Trump's tariffs, particularly from the 2018 trade war, resulted in U.S. consumers paying higher prices. A study from the Federal Reserve Bank of New York found that these tariffs cost the typical household an additional $419 per year.
Why did Biden keep most of Trump's tariffs in place after taking office?
-Although Biden campaigned on removing Trump's tariffs, he kept most of them in place, citing the need to protect domestic industries and national security. Additionally, there is a political advantage to appearing tough on China.
What are the main differences between Trump's and Biden's tariff policies?
-Trump's tariffs are more broad-reaching, targeting global imports and aiming to reduce the U.S. trade deficit. Biden's tariffs, on the other hand, are more targeted, focusing on specific industries such as steel, aluminum, and Chinese imports.
How do tariffs contribute to inflation?
-Tariffs increase the cost of imported goods. Companies often pass these costs on to consumers, leading to higher prices, which contributes to inflation.
What were some economic consequences of tariffs imposed during the Trump administration?
-Trump's tariffs generated around $233 billion in duties by 2024, but they also caused higher prices for consumers, strained trade relations, and led to retaliatory tariffs that hurt American exports, particularly in agriculture.
What impact could Trump's proposed 10% tariff on all imports have on the U.S. economy?
-Trump's proposed 10% tariff on all imports could cost U.S. consumers over $300 billion annually. It would likely increase prices across many sectors and have broad negative consequences for economic growth.
How does Biden's approach to tariffs differ from Trump's with respect to international relations?
-Biden's tariffs are more narrowly focused on specific industries, such as steel and technology, in an effort to protect U.S. manufacturing and counter China's influence. In contrast, Trump's tariffs are more aggressive and aimed at reducing trade deficits globally, with less focus on international diplomatic relations.
Why do some economists argue that tariffs are not effective in protecting jobs?
-Economists argue that tariffs shield companies from competitive forces, which discourages innovation and efficiency. This, in turn, harms long-term competitiveness and can ultimately result in job losses rather than protecting them.
What are the potential global economic impacts of continued tariff policies by both Trump and Biden?
-Continued tariff policies could shrink global GDP by 7%, according to the International Monetary Fund. Retaliatory tariffs from other countries would hurt U.S. exports and American manufacturing, worsening the economic situation.
Outlines
📊 The Impact of Tariffs on the U.S. Economy
This paragraph delves into the debate between President Joe Biden and former President Donald Trump regarding tariffs. It highlights Trump's defense of tariffs and how Biden has largely maintained them. The paragraph explains that while tariffs are intended to protect domestic industries, they result in higher costs for American consumers, contributing to inflation. It also emphasizes the significant amount of money collected from tariffs under both administrations, questioning which approach is more costly for the average American.
💼 The Broader Economic Implications of Trump's 10% Tariff Proposal
This section discusses Trump's proposal for a 10% tariff on all imports, a plan criticized for distorting global trade and negatively impacting the U.S. economy. Trump, however, justifies this by focusing on reducing the trade deficit with China. The paragraph also covers Trump's wider-reaching tariff proposals, such as replacing federal income tax with tariffs and imposing taxes on countries contributing to illegal immigration. Biden’s approach is described as more targeted, with specific tariffs on sectors like steel, aluminum, and Chinese goods.
🔧 The Consequences of Protecting Domestic Jobs with Tariffs
The third paragraph critiques tariffs as an ineffective tool for protecting American jobs and consumers. It argues that tariffs shield industries from competition, stifling innovation and leading to poorer outcomes for the economy. The author suggests that while tariffs are often touted as job-saving measures, they ultimately hurt economic growth by preventing industries from adapting to competitive forces and technological advancements.
Mindmap
Keywords
💡Tariffs
💡Inflation
💡Trade War
💡U.S. Consumers
💡Trump’s Trade Policies
💡Biden’s Trade Policies
💡Trade Deficit
💡Reciprocal Tariffs
💡Industrial Policy
💡Retaliatory Tariffs
Highlights
Trump's proposed 10% tariff on all imports could cost U.S. consumers more than $300 billion a year.
Both Trump and Biden talk about reducing inflation, but tariffs actually increase prices and act as a hidden cost to American consumers.
The U.S. has collected over $233 billion in trade war tariffs through March 2024, with 60% under Biden's administration.
Tariffs end up being a tax on American consumers, increasing the cost of living and contributing to inflation.
Trump has floated ideas like a 10% tariff on all imported goods, 60% tariffs on Chinese imports, and 100% tariffs on imported cars.
Biden has maintained most of the tariffs imposed by Trump, despite previously criticizing them during his 2020 campaign.
Trump's Reciprocal Trade Act proposes matching tariffs imposed by other countries with equivalent tariffs on U.S. imports.
Biden's tariffs have targeted specific sectors like steel, aluminum, and Chinese electric vehicles, aiming to counter China's overcapacity in those industries.
A study by the Federal Reserve Bank of New York found Trump's 2018 tariffs cost the average household an additional $419 per year.
Biden's administration completed a review of Trump's tariffs, acknowledging the negative effects but decided to keep them in place.
The Biden administration's Chips and Science Act aims to boost U.S. semiconductor production and domestic industries.
Economists argue that while tariffs are politically favorable, they distort global trade and act as a tax increase on American consumers.
Trump and Biden share common ground on using tariffs to protect domestic industries, though Trump's proposals are more wide-reaching.
The International Monetary Fund warned that trade restrictions like tariffs could shrink global GDP by 7%.
Retaliatory tariffs could harm U.S. exports, potentially shrinking the U.S. GDP by $62 billion, according to the American Action Forum.
Transcripts
President Joe Biden and former President Donald Trump are debating about tariffs.
If there's 10% tariffs, everything coming into the country.
That's going to cost the average American $2,500 a year more.
But, do you notice he never took out my tariffs?
He can't because it's too much money.
But not everybody supports tariffs.
The reality is that it ends up being a tax on American consumers.
It's a hidden cost.
Trump's proposed 10% tariff on all imports could cost the U.S.
consumers more than $300 billion a year.
The irony here is that while both Trump and Biden talk about the importance of
reducing inflation, tariffs actually will increase prices.
American firms have to pay the tariffs.
Then many companies, they need to recover the cost increase.
So what do they do?
They have to pass the cost increase to the consumers.
It also contributes to part of the inflation that we're facing right now.
And Americans are still paying for tariffs imposed by Trump during his first term.
Tariffs that Biden has largely maintained.
Over $233 billion in trade war tariffs have been collected through March 2024.
Over 60% of the total about $144 billion was collected under Biden's
administration, while nearly 40% was collected during Trump's time in office.
So, which candidate's tariffs will be more expensive for the American consumer, and which trade war would
American voters rather pay for?
Tariffs are a tax on imported goods or services from another country.
Policy makers argue tariffs can be a tool to protect and help grow domestic industries and ensure national
security.
The mechanism that a politician is trying to achieve with a tariff is saying, 'Hey, we're going to put up a
barrier to the stuff that you can buy from a different country, so that instead you have to buy it from a
producer here at home.'
But, tariffs may also result in unintended economic consequences.
Trump's trade war tariffs generated about $233 billion in duties collected by customs through
March 2024, and it is U.S.
consumers that paid the extra billions through higher prices.
China doesn't pay the tariffs.
The tariffs are paid by American companies that import Chinese goods, and they pass those costs on as much as
they can to their consumers.
It comes at the cost of us having to pay a higher price for that domestically produced good, rather than buying
the cheaper foreign alternative.
A study from the Federal Reserve Bank of New York found that Trump's 2018 tariffs cost the typical household an
additional $419 per year.
We saw in the 2018-2019 trade war, almost 100% of the tariff was passed
through to U.S. consumers.
And so that means, yes, U.S.
consumers had to pay higher prices.
The Biden administration says its recent tariffs will not have an inflationary impact because the tariffs
only target specific sectors.
When the Biden people say it's not inflationary, I don't know what they mean, and prices of those products
are going to go up. We had an experience actually with steel and aluminum.
We saw what happened with that.
We had experience with tires during the Obama administration.
They imposed tariffs on foreign-made tires.
And what happened? The price of the tires went up.
It's not complicated.
The U.S. economy and inflation are among the top concerns for voters.
An April 2024 NBC news poll found that 23% of voters were concerned about the rising
cost of living and inflation.
11% of voters noted jobs and economy as key issues.
The economics on tariffs are really clear that they're a tax increase that ultimately we pay.
But, the politics on them are actually really favorable because the tariff is this policy tool that
lets a politician say, 'Hey, we're going to punish foreign producers, we're going to protect domestic
producers.'
Despite their differing stances on policy, both Biden and Trump have common ground when it comes to tariffs.
So, on the surface, the tariffs that Trump had imposed, even during his last term, is really
trying to protect jobs.
And Biden, to some extent, is doing the same.
A closer look at each president's tariff policies reveals where the ideology begins to differ.
Trump is campaigning on getting even tougher on tariffs if he is elected.
You look at Trump. He started the trade war with China by imposing around 25% tariffs on
certain items. And now, he is saying that if he gets elected, he will try to increase the tariffs to
60%. So, from his perspective it is really America first.
So in that case, Americans should buy the products made in the United States produced by Americans.
I also will pass the Trump Reciprocal Trade Act.
That's if China or any other country makes us pay 100% or 200% tariff or tax, w
e will make them pay a reciprocal tariff or tax of 100% to 200% right back.
Trump is talking about very broad tariffs on the whole world.
And that's really not for a specific purpose of helping U.S.
industries. It's really more to sort of show that America is in charge.
Trump has floated ideas like a 10% tariff on every imported goods, and 60% tariffs on all Chinese
goods imported, and a 100% tariff on imported cars.
You'd also talked about proposing a 10% tariff.
Um, and I wanted to ask you about that because the center-right American Action Forum, which is a think
tank, said that they thought the plan would, quote, distort global trade, discourage economic activity and
have broad negative consequences for the U.S.
economy.
Well, they're wrong. It would distort international trade.
It would bring it back to the United States.
For President Trump, he's looking at the issue from the trade deficit.
When he started the trade war, the trade deficit between U.S.
and China is over $350 billion, and now it has actually gone down.
So on one hand, it said that while it is working.
But, there's a caveat actually.
The U.S. still imports more things from other countries, but not directly from China.
Trump has also talked about replacing the federal income tax with tariffs and potential tariffs on
countries whose citizens may be contributing to illegal immigration.
And, I want you to give us 25,000-28,000 soldiers on our border to stop the people that are coming in with
the caravans. And they laughed at me.
I said, that's okay. You don't want to do it, right?
Yeah. I'm going to put a 25% tariff on all of your products, including all of the cars that you're
selling.
While Trump's tariff proposals are more wide reaching, Biden's recent approach to tariffs has been targeted.
I'm announcing today 25% tariff on Chinese steel and aluminum products and will counter China's
overcapacity in these industries.
Biden announced more tariffs on $18 billion worth of Chinese imports, including 100%
tariff on electric vehicles, a 50% tariff on solar cells, and a 25% tariff on steel and
aluminum. Starting in 2025, chinese semiconductor tariffs will double to 50%.
When he was running for presidency in 2020, he said that if he was elected, he would actually
remove the tariffs imposed by President Trump.
But, he didn't.
When Biden took office, he maintained most of the tariffs that Trump had put in place.
When Biden was campaigning, he talked about the tariffs the way an economist would.
Manufacturers and consumers...
Losing and paying more.
But now, he has kept those tariffs, recommended increasing them.
These tariffs are also being paired with massive domestic industrial policy.
So, we have barriers to trade going up and we also have significant government subsidies going to
certain sectors.
Thanks to my Chips and Science Act, one of the most significant investments ever in science and technology,
we're bringing this vital industry back home where it started in the United States of America.
I'm not sure that this really is even going to succeed in the targeted industries that Biden is talking about.
His theory is that that's going to create even more incentive for U.S.
chipmakers to produce these chips domestically for very highly targeted industries.
That might work.
Kind of. The problem with that is, when you do it Biden's way and you impose tariffs only on one country,
it's very likely that one of the results will be that companies will produce the same product in a different
country and avoid the tariff.
The Biden administration completed a review of tariffs imposed under Trump, and decided to keep the Section
301 tariffs in place.
The conclusion to keep the tariffs is actually pretty weird one.
If you read the Section 301 report, they note how the tariffs have hurt output employment,
especially in manufacturing, how the retaliatory tariffs that they brought about hurt American
agriculture. But then, they recommend keeping them and increasing them.
In fact, more tariffs from Trump's trade war with China have been collected under the Biden administration than
the Trump administration.
I don't think any politician right now wants to look soft on China, even though the tariffs are
primarily harming the U.S.
The story is that these are tariffs on China that we are making China pay.
Neither candidate's campaign responded to CNBC's request for comment.
Both sets of tariffs would have significant consequences on consumers.
Trump's would have much more because they're much bigger.
The real political question is, are we going to have higher targeted tariffs under Biden,
or are we just going to have significantly higher tariffs under Trump?
The International Monetary Fund warned trade restrictions could shrink the global GDP by
7%. Economists suggest retaliatory tariffs would also hinder economic growth.
And, foreign countries almost certainly will retaliate.
They're just going to do the same thing to us.
They're going to impose big new tariffs on U.S.
exports to their countries and that is going to really significantly hurt American manufacturing
because we export a lot to foreign countries.
According to an estimate from the center-right American Action Forum, if trading partners retaliate, it could
shrink the U.S. GDP by $62 billion.
Mr. President, is there no concern that China could impose retaliatory tariffs or retaliatory actions that
would make doing business in China difficult for American companies...
That's okay ...Which are dependent on China for growth?
That's okay?
Yeah, sure, they might do that.
But you know what? They didn't.
So tell Starbucks, tell McDonald's that it's going to be, all of a sudden, maybe more difficult to do
business there?
They didn't do it with me.
You know, we went through years and they didn't do it with me.
What people need to know is, you know, regardless of what the politicians are telling you, tariffs are not
good economic policy.
They're not going to help American workers.
They're not going to help American consumers.
And, we're going to be worse off for them.
Throughout history has been shown that this is not the effective way to protect jobs.
I think that we need to rethink about how we actually use tariffs to protect the jobs in the United
States.
The U.S. has tried in industry after industry to protect job losses, to
protect firms from foreign competition or from technological change.
And, what you get when you shield a firm from those competitive forces is not a good outcome.
You're shielding them from forces that would otherwise force them to innovate, force them to change the way
they do business and become more competitive.
But, when we place these barriers up, we insulate ourselves from those potential gains,
and we make ourselves poorer in doing that.
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