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Trump's trade war would cost middle-class families at least $1,700 a year - despite claims it would help working Americans
Presidential candidate Donald Trump's new trade war could cost middle-class families at least $1,700 a year, a shock new report has warned.
If he gets into office later this year, the former president wants to cut US reliance on income taxes - and instead make up the shortfall from increasing import tariffs.
Trump has championed tariffs as helping working Americans, but new research says the policies could harm US workers and industries and worsen international relations.
Trump's aggressive trade proposals would cost consumers at least $500 billion a year - or at least 1.8 percent of GDP - according to a new paper published by nonpartisan think tank the Peterson Institute for International Economics.
That is five times the cost of the US-China trade war the former president started in 2018, it found.
Presidential candidate Donald Trump 's new trade war could cost middle-class families at least $1,700 a year, a new report has warned
The presidential candidate is proposing a 60 percent tariff on all Chinese goods, and a 10 percent 'across-the-board' tariff on all $3 trillion worth of US imports.
He is also calling for an extension to expiring tax cuts from 2017 - while suggesting a possible new round of tax cuts.
'The tariffs would reduce after-tax incomes by 3.5 percent for those in the bottom half of the income distribution and cost a typical household in the middle of the income distribution about $1,700 in increased taxes each year,' the report read.
'If executed, these steps would increase the distortions and burdens created by the rounds of tariffs levied during the first Trump administration (and sustained during the Biden administration), while inflicting massive collateral damage on the US economy.'
It stated that these policies are more likely to hurt than help the lower and middle-income Americans they purport to benefit.
The $1,700 tax hit for the typical American household is just the minimum possible impact, the report stresses.
This estimate does not include potential further damage from foreign retaliation and lost competitiveness.
'This is the tip of the iceberg,' co-author Kimberly Clausing, a senior fellow at the Peterson Institute, told CNN.
'The cost of retaliation will be very large. The Europeans will tariff us. The Mexicans and Canadians will be very upset. People aren’t going to take it lying down,' she said.
The think tank analysis asserts that tariffs on imported goods are 'fully passed on to US buyers', while Trump has suggested that other nations will pay for US tariffs.
The US International Trade Commission found in a study last year that US importers 'bore nearly the full cost' of tariffs.
The agency estimated that that prices increased by about 1 percent for each 1 percent increase in tariffs on Chinese-made goods, steel and aluminum, CNN reported.
'In contrast to Trump's frequent, and mistaken, claims that foreigners bear the impact of tariffs, economists have long understood that tariffs burden domestic purchasers of imported goods,' the Peterson Institute report read.
However former president Trump is not alone in embracing tariffs - with both parties showing support for the measure as a way to show they are tough on China.
President Joe Biden has also kept many of the tariffs in place which Trump introduced during his presidency.
The report said aggressive tariffs are are more likely to hurt than help working Americans
Trump's aggressive trade proposals would cost consumers at least $500 billion a year, the report found
Biden has announced increased tariffs on electric vehicles coming from China
'President Biden, despite having ample opportunity, has failed to remove the tariffs on China levied during the Trump presidency,' the Peterson Institute report read.
It noted that tensions with China may have made it difficult to reverse many of the tariffs, but they still continue to harm American households, albeit to a much lesser degree than Trump's new proposals would.
Earlier this month, Biden announced increased tariffs on $18 billion worth of Chinese goods - including electric cars, critical minerals and solar products and batteries.
Karoline Leavitt, the Trump campaign's national press secretary, told CNN in a statement: 'The American people don’t need "papers" from alleged "experts" to know Bidenomics has robbed them of thousands of hard-earned dollars, and they will have more money back in their pockets with President Trump back in the White House.'