Former President Trump believes that he can compel foreign companies or their governments to cover U.S.-imposed tariffs on goods they ship to the U.S. This notion is illogical as shifting tariffs to foreign entities would result in foreign governments reducing taxes on their people and imposing tariff fees on exported goods to pay for domestic plans, such as Trump suggested in a recent speech.

Contrary to the expectation of receiving substantial revenue from foreign trading partners, Trump’s tariff strategy would actually lead to significant self-inflicted economic harm. It would amplify the damage caused by earlier tariffs on numerous traded products and with all U.S. trading allies. The funding that was anticipated to come into the Treasury would not be generated by foreigners but by American consumers. This mechanism would essentially serve as a new national sales tax applied to U.S. citizens and would be levied on every imported item.

Under Trump’s proposed universal 20 percent tariffs (increasing to 60 percent for China), import fees would be collected at U.S. border ports by Customs and Border Protection. The importers of record would be required to settle these tariffs before the goods could clear customs and reach their intended U.S. markets. There is no process in place to charge foreign producers for products sent to the U.S.

Ultimately, these tariffs result in additional costs for American merchants, which are then transferred to the nation’s consumers who wish to purchase these items. Economists found that, in most cases, the final price of the imported product for U.S. consumers increased by the full tariff amount. Domestic firms also raised prices on their products following the tariffs, due to reduced competition from imports.

Consumers are negatively impacted by higher prices, particularly those from lower-income families as they spend a significant part of their income on goods. Additionally, the augmented profits for U.S. companies from tariffs demote competition, hindering product upgrades. This, along with reduced efficiency in U.S. production, negatively affects the country’s Gross Domestic Product.

Despite his assertion that tariffs will boost domestic employment, Trump fails to acknowledge the factors that counterbalance any jobs preserved in sheltered industries. American firms that import goods from overseas for production purposes incur higher costs due to tariffs on these inputs, making their products less competitive in foreign markets. This reduced competitiveness often results in loss of employment. Trump’s 2018 tariffs caused more job losses in American manufacturing than they saved.

Furthermore, foreign countries are likely to retaliate against Trump’s tariffs, which could result in breach of international trade agreements. This retaliation could lead to the expansion of a trade war, resulting in widespread economic consequences, including reduced global investment and potential recession.

In conclusion, Trump’s new tariff plan represents a severe protectionist approach that would ultimately harm the U.S. economy, reduce competitiveness, and lower living standards in the nation.