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Republicans Like to Cut Taxes. With Tariffs, Trump Is Raising Them.

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President Trump’s tariffs are scrambling the Republican plan for the economy, long centered on tax cuts and growth.The Republican Party embarked this week on a haphazard experiment in economic policymaking, wagering that the United States can weather a monumental tax increase in the form of broad tariffs on imported goods as long as Congress also cuts taxes on income.It’s a mash-up that many investors, economists and even some G.O.P. lawmakers expect to be a failure.“I always think that with gambling, at least you have a chance of winning. This is worse than that,” Douglas Holtz-Eakin, a conservative economist who worked for former President George W. Bush, said. “This is betting with the mafia. You’re going to lose.”President Trump’s plan to charge at least a 10 percent tariff on nearly all imports into the United States — along with much higher rates on goods from many countries — is the culmination of his quest to force companies to manufacture domestically, even if it comes at the expense of a relatively strong economy. Because tariffs are a type of taxation, Mr. Trump’s plan is among the largest tax increases in decades, analysts say, a policy change that sent the stock market reeling, paralyzed corporate investment and shoved the economy closer to a recession.At the same time, Republicans on Capitol Hill are plowing forward with legislation that would lock in lower taxes for American individuals and companies. There’s diminishing hope among Republicans that those cuts can make up for drag created by the tariffs. Some of Mr. Trump’s allies and tax cut enthusiasts, like Stephen Moore, his former economic adviser, have been begging the president for “more tax cuts and less tariffs, please.”Of course, Mr. Trump and the White House argue that tariffs are not taxes on Americans, but rather on foreign companies that will have to lower their prices to maintain access to the U.S. market. Mainstream economists have consistently found that tariffs raise prices for American consumers and companies, including domestic manufacturers who import materials to turn into final products.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    in Economy

    When It Comes to Tariffs, Trump Can’t Have It All

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    The president has promised big results, from raising revenue to reviving domestic manufacturing. But many of his goals undermine one another.President Trump has issued an unremitting stream of tariff threats in his first month in office, accompanied by nearly as many reasons for why they should go into effect.Tariffs on Canada, Mexico and China are a cudgel to force those countries, America’s largest trading partners, to crack down on the flow drugs and migrants into the United States. Levies on steel, aluminum and copper are a way to protect domestic industries that are important to defense, while those on cars will prop up a critical base of manufacturing. A new system of “reciprocal” tariffs is envisioned as a way to stop America from being “ripped off” by the rest of the world.Those goals are almost always followed by another reason for hitting allies and competitors alike with tariffs: “Long term, it’s going to make our country a fortune,” Mr. Trump said as he signed an executive order on reciprocal tariffs this month.Mr. Trump maintains that tariffs will impose few, if any, costs on the United States and rake in huge sums of revenue that the government can use to pay for tax cuts and spending and even to balance the federal budget.But trade experts point out that tariffs cannot simultaneously achieve all of the goals that Mr. Trump has expressed. In fact, many of his aims contradict and undermine one another.For instance, if Mr. Trump’s tariffs prod companies to make more of their products in the United States, American consumers will buy fewer imported goods. As a result, tariffs would generate less revenue for the government.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 138 Shares169 Views

    in Economy

    Trump Pitches External Revenue Service to Collect Tariffs: What to Know

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    President Trump has promised to generate a “massive” amount of revenue with tariffs on foreign products, an amount so big that the president said he would create a new agency — the External Revenue Service — to handle collecting the money.“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Mr. Trump said on Monday in his inaugural address, where he reiterated a promise to create the agency. “It will be massive amounts of money pouring into our Treasury coming from foreign sources.”Much about the new agency remains unclear, including how it would differ from the government’s current operations. Trade experts said that, despite the name “external,” the bulk of tariff revenue would continue to be collected from U.S. businesses that import products.Here’s what you need to know about what Mr. Trump has proposed.The U.S. has an established system for collecting tariffs.Tariff revenue is currently collected by U.S. Customs and Border Protection, which monitors the goods and the people that come into the United States through hundreds of airports and land crossings.This has been the case nearly since the country’s inception. Congress established the Customs Service in 1789 as part of the Treasury Department, and for roughly a century tariffs were the primary source of government revenue, counted in stately customs houses that still stand in most major cities throughout the United States, said John Foote, a customs lawyer at Kelley, Drye and Warren.With the creation of the income tax in 1913, tariffs became a minor source of government revenue, and after the Sept. 11 attacks, the customs bureau was moved from the Treasury Department to the Department of Homeland Security.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Did Trump’s Tax Cuts Do?

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    Economic upheaval caused by the pandemic has clouded analysts’ ability to understand the effects of the 2017 tax law. Republicans call it a huge success and want to extend it anyway.Seven years ago, when Republicans passed the most significant overhaul of the tax code in a generation, they were sure the law would supercharge investment, raise wages and shift the American economy into a higher gear.So did it?The answer, at least for now, is largely lost to history.A pandemic and a surge in inflation convulsed the global economy not long after the law passed in 2017, scrambling the data that analysts would have typically relied on to draw conclusions about whether the tax cuts helped the economy grow the way Republicans had promised.As a result, policymakers in Washington are now relying on only a partial understanding of the law’s past as they weigh committing roughly $5 trillion toward continuing it.“Basically, from 2020 the data is kind of useless,” said Alan Auerbach, an economics professor at the University of California, Berkeley, who counts Kevin Hassett, a top economic adviser to President-elect Donald J. Trump, among his former students.Economists have focused on just two years before the coronavirus pandemic, 2018 and 2019, to measure the law’s consequences for the most important economy in the world. But that’s a limited window for trying to discern whether the tax cuts prompted a cycle of investment and growth that can take years to play out.“In terms of looking at longer-run effects, pretty much just forget about it,” Mr. Auerbach said. “There’s just no way to control for the effects of Covid.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 138 Shares189 Views

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    Could Trump’s Tariffs Lead to Higher Prices? Here’s What to Know.

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    The president-elect says that tariff is “the most beautiful word in the dictionary.” You may be hearing it a lot.President-elect Donald J. Trump has professed a belief in the power of tariffs for decades. Now, as he prepares to take office, they are a central part of his economic plan.Mr. Trump argues that steep tariffs on foreign goods will help benefit U.S. manufacturing and create jobs. His proposals would raise tariffs to a level not seen in generations. Many economists have warned of potentially harmful consequences from such a move, including higher costs for American households and businesses, and globally destabilizing trade wars.Here are five crucial things to know about Mr. Trump’s sweeping trade plans.Mr. Trump has floated several hefty tariff plans.While campaigning for the White House, Mr. Trump offered up a running list of tariffs. He talked about a “universal” tariff of 10 to 20 percent on most foreign products. He has proposed tariffs of 60 percent or more on Chinese goods. And he has suggested removing permanent normal trading relations with China, which would result in an immediate increase in tariffs on Chinese imports.Mr. Trump has also promoted the idea of a “reciprocal” tariff, in which the United States would match the tariff rates that other countries put on American goods. He has suggested using tariff revenue to replace income taxes. And he has threatened tariffs of 100, 200 or even 1,000 percent on Mexico, saying the country should do more to stop flows of migrants and shipments of Chinese cars.The Biden administration has also raised tariffs on goods from China, but Mr. Trump’s plans are much larger — affecting trillions of dollars of products, rather than tens of billions.Mr. Trump says foreign companies pay the tariffs. That’s usually wrong.A tariff is a tax that is put on a product when it crosses a border. For instance, a company that brings its product into the United States — the importer — actually pays the tariff to the U.S. government.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 125 Shares199 Views

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    Trump Keeps Promising New Tax Cuts. Other Republicans Are Wary.

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    Former President Donald J. Trump’s costly tax agenda undermines the changes he signed into law in 2017. Some Republicans are wary.When former President Donald J. Trump started proposing new tax cuts on the campaign trail, pledging “no taxes on tips” in June, Republicans rallied around his idea. Even Vice President Kamala Harris, his Democratic rival, copied it.Four months and half a dozen proposed tax cuts later, Republican lawmakers and aides on Capitol Hill, as well as some economists in touch with Mr. Trump’s campaign, are taking a more circumspect approach. Asked whether they supported Mr. Trump’s proposals, a typical response was: Let’s see after the election.“I’ll decide what my position is on it once we see what the whole picture is next year,” Senator Michael D. Crapo, an Idaho Republican who could lead the chamber’s tax-writing committee if his party regains control of the Senate, said last month.The caution is a sign that Mr. Trump’s ideas may be too expensive and outlandish for Republicans in Congress to embrace. The rest of the party had been focused on extending the 2017 tax cuts that Mr. Trump signed into law. Some of Mr. Trump’s recent proposals undercut changes that were made as part of that tax package.Even if Mr. Trump and his party control Washington next year, Republicans will be in a far different place on tax policy than they were in 2017. Back then, Republicans on Capitol Hill spent years making plans for a tax overhaul, with a focus on cutting the corporate tax rate and simplifying elements of the code.Once they were in office, they put those plans into motion. Mr. Trump’s general desire to cut taxes fit in with the party’s pre-existing agenda, and conservatives achieved many of their goals with the 2017 Tax Cuts and Jobs Act.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares129 Views

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    Trump’s Plans Could Increase National Debt Twice as Much as Harris’s Proposal

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    A new analysis finds that Vice President Kamala Harris and former President Donald J. Trump’s plans would both add to the deficit, but Mr. Trump’s proposals could create a fiscal hole twice as big.Former President Donald J. Trump’s economic proposals could inflame the nation’s debt burden while ultimately raising costs for a vast majority of Americans, according to a pair of new economic analyses that are among the most in-depth studies to date of the Republican nominee’s plans.The Committee for a Responsible Federal Budget, a nonpartisan group that seeks lower deficits, found that Mr. Trump’s various plans could add as much as $15 trillion to the nation’s debt over a decade. That is nearly twice as much as the economic plans being proposed by Vice President Kamala Harris.And an analysis from the Institute on Taxation and Economic Policy, a liberal think tank, found that Mr. Trump’s tax and tariff plans would, on average, amount to a tax increase for every income group except the top 5 percent of highest-earning Americans.The two new studies differ in some respects. The budget group looked at the cost of both candidates’ tax and spending plans over 10 years, while the tax institute focused on what the impacts of Mr. Trump’s tax and tariff plans would be in 2026. But together they show that Mr. Trump’s agenda could be both costly and regressive by placing a greater burden on those making the least amount of money.Over the course of his campaign, Mr. Trump has floated a flurry of potentially far-reaching policies, including exempting certain forms of pay from taxes and levying broad tariffs on nearly all imports to the United States. He also wants to extend elements of the tax law he enacted in 2017 that are set to expire after next year.“It’s almost difficult to come up with a tax plan that would raise taxes on most Americans, but still increase the deficit by hundreds of billions of dollars a year — and that’s what this does,” said Steve Wamhoff, the federal policy director at I.T.E.P.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 150 Shares109 Views

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    Trump’s Plans Could Increase U.S. Debt While Raising Costs for Most Americans

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    A new analysis estimates that the former president’s proposals could grow deficits by as much as $15 trillion over a decade.Former President Donald J. Trump’s economic proposals could inflame the nation’s debt burden while ultimately raising costs for a vast majority of Americans, according to a pair of new economic analyses that are among the most in-depth studies to date of the Republican nominee’s plans.The Committee for a Responsible Federal Budget, a nonpartisan group that seeks lower deficits, found that Mr. Trump’s various plans could add as much as $15 trillion to the nation’s debt over a decade. That is nearly twice as much as the economic plans being proposed by Vice President Kamala Harris.And an analysis from the Institute on Taxation and Economic Policy, a liberal think tank, found that Mr. Trump’s tax and tariff plans would, on average, amount to a tax increase for every income group except the top 5 percent of highest-earning Americans.The two new studies differ in some respects. The budget group looked at the cost of both candidates’ tax and spending plans over 10 years, while the tax institute focused on what the impacts of Mr. Trump’s tax and tariff plans would be in 2026. But together they show that Mr. Trump’s agenda could be both costly and regressive by placing a greater burden on those making the least amount of money.Over the course of his campaign, Mr. Trump has floated a flurry of potentially far-reaching policies, including exempting certain forms of pay from taxes and levying broad tariffs on nearly all imports to the United States. He also wants to extend elements of the tax law he enacted in 2017 that are set to expire after next year.“It’s almost difficult to come up with a tax plan that would raise taxes on most Americans, but still increase the deficit by hundreds of billions of dollars a year — and that’s what this does,” Steve Wamhoff, the federal policy director at I.T.E.P., said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

  • 113 Shares99 Views

    in Economy

    In Nevada, Economy Tops Issues as Unemployment Remains High

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    The state is among a handful that will decide the presidential contest, and workers have felt increased prices at the grocery store and gas station.Sold-out shows along the Strip. Crews constructing a course for a major Formula 1 race. A record number of passengers at Harry Reid International Airport.For much of the past year, Las Vegas, the anchor of Nevada’s economy, has watched in delight as visitors have flocked to town for conventions, football games and summer pool parties, further solidifying its rebound from the doldrums after the pandemic shutdowns.But statewide, the economy is still burdened by high unemployment and higher costs of living — twin pocketbook struggles that animate voters here in one of a handful of states expected to decide the November presidential election.And about a quarter of Nevada voters in a New York Times/Siena College poll last month named the economy as their top issue. It was cited nearly twice as often as any other concern, comparable to findings in other swing states.A topic with particular resonance among Nevada workers — eliminating federal taxation on tips — burst into the national discourse after former President Donald J. Trump told a crowd in Las Vegas that he intended to do away with the practice if elected. He was inspired, Mr. Trump has said, by a conversation with a waitress in the city.His opponent, Vice President Kamala Harris, later endorsed the idea during a campaign stop in Las Vegas, but paired the proposal with a promise to raise the federal minimum wage.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More