At a time when inflation continues to hit average Americans in the wallet and middle-class budgets continue to grow tighter, the last thing taxpayers need is a new, broad tax on American consumers. It’s surprising then, that one of the few things President Biden and former President Trump seem to agree on is exactly that: an inflationary, significant tax increase that affects taxpayers of all income levels.
Biden announced recently that not only would he retain Trump’s tariffs on $300 billion worth of imports from China, he would increase the tax. Biden plans to quadruple the tariff rate on imported electric vehicles, more than triple tariffs on electric vehicle batteries, and double tariffs on semiconductor chips and solar cells.
What makes Biden’s announcement particularly ironic is that he strongly criticized these same tariffs when President Trump first imposed them. Now, Biden is not only failing to reverse Trump’s tariffs, he is doubling (and tripling, and quadrupling) down on them.
Here is what Biden said about those exact same Trump-imposed tariffs in 2019 https://t.co/jpmwNq9kXb https://t.co/jv0YIGOoUS pic.twitter.com/3dtPc3vLLF
— Catherine Rampell (@crampell) May 14, 2024
Biden’s about-face is no doubt due to the fact that Americans continue to view tariffs as somehow different from other types of taxes. But while tariffs are nearly always framed as harming the countries whose imports they apply to, it is important to remember that tariffs impose taxes that are paid by American consumers.
For instance, under Biden’s expanded 100 percent tariff for electric vehicle imports, Chinese automobile manufacturers would not pay a dime to the federal government. Instead, American consumers who desired to purchase their goods would pay the tariff themselves. Even where the foreign goods are imported by an American business, the American consumer ultimately pays in the form of higher prices. In every sense of the phrase, tariffs are taxes paid by Americans.
Even American consumers who are careful to “Buy American” are impacted by these tariffs. Faced with reduced competition from foreign imports, domestic businesses are able to raise prices with little fear of being undercut by cheaper foreign competitors — as indeed they did in the wake of Trump’s past tariffs.
By embracing this tax, President Biden is fairly blatantly violating his pledge not to raise taxes on Americans making less than $400,000 a year. Trump’s existing tariffs have cost the average taxpayer $1,700 already, and expanding them will only cost taxpayers even more.
Advocates of Biden and Trump’s trade policies have argued that they fulfill national security goals, ensuring that America can compete with its geopolitical rivals. There is some validity to the idea that we should rebalance our trade relationships away from potential enemies and toward our allies, as it is undoubtedly true that China is engaged in some unfair trade practices — particularly when it comes to the country’s systematic theft of intellectual property.
However, if the goal were to rebalance our trade relationships towards our allies and away from our geopolitical foes, Biden and Trump have chosen odd ways to go about this. As President, Trump imposed significant tariffs on imported steel and aluminum from the European Union (EU) — tariffs that Biden temporarily replaced with similarly restrictive import quotas. Trump is also reportedly planning significant new tariffs on imports from the EU. Rebalancing trade away from adversaries and toward allies may be a viable policy. Cutting ourselves off from the world is not.
Perhaps the single biggest step the country could take to reduce inflation would be to reduce or eliminate the trade barriers that reduce competition and drive up prices. It’s a shame, then, that one of the few things both parties seem to agree on is a quixotic and self-defeating trade policy that has contributed directly to price increases. An economic policy that aims to relieve the burden on struggling taxpayers should start with a trade policy that doesn’t involve shooting ourselves in the foot.
Andrew Wilford is the Director of the Interstate Commerce Initiative with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.