To paraphrase Shakespeare, a tax by any other name costs as much. Despite Donald Trump’s self-professed love affair with tariffs, they are a tax just like any other tax. They raise prices and reduce purchasing power.

Taxes aren’t always bad, but the question is what we hope to accomplish with tariffs. President Joe Biden imposed tariffs on a limited number of items. The purpose was to give specific industries, such as advanced semiconductors, electric vehicles, solar panels and batteries a chance to grow and become competitive internationally. By contrast, President Trump seems to be imposing tariffs in a haphazard manner with no apparent purpose. 

The 25 percent tariff he was initially proposing on imports from Canada and Mexico, our neighbors and two of our closest allies, was because they were not cooperating with the United States in restricting the flow of migrants and fentanyl into the United States. In fact, both countries have long cooperated with the United States in these areas, with Mexico sharply reducing the flow of migrants after negotiating an agreement with Biden in June. 

On fentanyl, the reality is that the flow will never be zero. Just as we can never be successful in shutting down every illegal drug lab in the United States, our neighbors will also never be able to completely shut down the manufacture and transport of fentanyl into the United States. In short, Trump’s ostensible reason for these tariffs made no sense.

There is a similar story with the more recent round of 20 percent tariffs on the import of steel and aluminum. This will raise the cost of steel and aluminum in cars, refrigerators and other products, but it is not likely to have much effect on domestic employment or production in these industries. Our imports of both items come to around $50 billion a year. These taxes will directly cost the country close to $10 billion a year in higher prices, a bit less than a hundred dollars per family.

While these tariffs will create some jobs, the number is likely to be small and the jobs will not be especially good paying. In 1980, one-third of manufacturing jobs were unionized compared to 15 percent for the private sector as a whole. The numbers today are 8 percent for manufacturing and 6 percent for the rest of the private sector, and the manufacturing wage premium has largely disappeared.

If Trump continues his tariff wars further, we can expect the bill to be considerably higher. We import $4 trillion a year. If we imposed the 20 percent tariff he advertised in his campaign, that would come to $800 billion a year, a bit less than one-third of what we get from the individual income tax annually, although the volume of imports would be reduced as a result of the tariff, thereby lowering revenue.

Import taxes are also a regressive form of taxation. Low- and middle-income people spend a much higher share of their income on goods compared to high-income people who spend more on services like restaurants and travel. It’s not clear why non-billionaires would want low- and middle-income people to face a much higher tax burden.

We also know that foreign countries will retaliate for our tariffs. When Trump announced plans for his 25 percent tariffs on Mexico and Canada, the Canadian government said that it would impose steep taxes on Kentucky bourbon and Tesla cars. In Trump’s first term, China’s retaliation against soybean farmers led us to spend tens of billions of dollars on farm subsidies to make up for the loss. 

Finally, Trump’s tariffs show the United States to be an untrustworthy trading partner. The imposition of unilateral tariffs violates numerous trade agreements we have entered into over the years. In particular, the tariffs threatened against Mexico and Canada are a clear violation of the United States, Mexico, Canada trade agreement that Trump negotiated in his first term. In effect, Trump is saying that an agreement he had committed the country to less than five years ago is meaningless. 

By effectively throwing this and other trade agreements in the toilet, Trump is telling other countries that there is little point in negotiating with him. His commitment means nothing. In short, Trump’s import taxes do little other than raise prices and antagonize trading partners. It’s not a good way to go.

For another view on this topic, visit https://riverreporter.com/stories/point-let-free-trade-work-its-magic,187220?.

Dean Baker is a senior economist at the Center for Economic & Policy Research. He wrote this for InsideSources.com.