President Trump’s enthusiasm for imposing tariffs has been noticeable as he deems it “the most beautiful word in the dictionary.” However, his focus on tariffs and the pledge to levy significant taxes on majority of the U.S. imports presents various complexities and concerns.

Trump’s fixation with tariffs stems mainly from the U.S. trade deficit, which highlights the disparity between what the country imports and exports. While trade deficits reflect consumer benefits from foreign goods and services, it raises concerns when foreign policies contribute to the trade imbalance, posing unfair hardships for American workers.

The President often attributes the trade deficits to other nations’ value-added taxes, a form of consumption tax collected at various production stages, different from sales tax. The levying of value-added taxes on imports and the refund on exports incentivizes the latter while creating a hurdle for the former nations, sparking Trump’s critiques.

Although Trump’s criticism regarding the disadvantageous effects of value-added taxes by America’s trading partners is justified, his proposal to combat it with tariffs is flawed. Introducing unilateral tariffs may not be suitable for varying situations concerning trade partners with different tax policies. Alternatively, implementing value-added taxes could encourage exports and discourage imports but still poses challenges.

While consumption taxes such as tariffs or value-added taxes might benefit trade dynamics, they have regressive impacts on wealth distribution as compared to progressive income taxes. Combating the trade deficit or wealth inequality via consumption taxes or higher tariffs may worsen the existing wealth gap in the U.S., which is expanding rapidly.

Trump’s emphasis on tariffs and consumption taxes could lead to a tax system favoring the wealthy, escalating wealth inequality. Increasing the wealth gap can pose serious threats to democratic stability, reminiscent of the warnings by historical figures like Thomas Jefferson against such disparities. Focusing on consumption taxes and neglecting income tax may exacerbate the disparity, eventually leading to societal unrest and instability.