A new study has been conducted by J.P. Morgan that is revealed that the latest round of tariffs imposed by Pres. Trump will cost US households an additional $1000 per year. This goes to show exactly how much the average person suffers during a trade war. Right now, the tariffs are costing us an additional $600 per year, so that number is likely to go up.
The company got their figure looking at what a 10% tariff would do on the hundred and $12 billion worth of Chinese imports. The president has announced that this tariff will be imposed at the start of September, but he is currently considering scaling it back. Trump figures is not a good time of year tax Americans this close to the Christmas season.
The tariffs would be slapped on two very popular holiday items like laptops, toys, cell phones, and other electronics. If the tariff that he threatened goes through, which was a 25% tariff, it would cost us $1500 per year and it would dramatically slow down the busy Christmas shopping season.
“What distinguishes China Phase III tariffs from preceding tariffs is the impact to Consumption and Capital goods,” analysts wrote. While previous tariffs focused more on “intermediate goods,” this batch “suggests that the expected consumer impact should be larger in the latest round,” the bank’s analysts wrote.
The Tariffs Are Offsetting Any Tax Cut Gains
There’s really no point in cutting taxes and then turning around and placing increasingly higher tariffs on Chinese products. Currently these tariffs are offsetting any tax break us Americans were getting. It was estimated that around 80% of us were seeing some sort of tax decrease. Now that number is arbitrary.
“The impact from reduced spending could be immediate for discretionary goods and services since tariffs are regressive,” they wrote. “Unlike the agriculture sector which is receiving subsidies/aid to offset the impact of China’s retaliatory actions, there is no simple way to compensate consumers.”
If there’s one weakness that Pres. Trump has going into the 2020 election, it will be the tariffs and the impact they have on the economy. There’s no doubt that Trump is going to run on lower taxes and a much higher stock market. But the highs of the early part of his administration will continue to be dampened as the stock market keeps taking hit after hit, farmers are feeling an increasing brunt of the damage, and tariffs offset any benefits of the tax cuts.
This is going to make Pres. Trump very vulnerable in 2020 unless a new deal with China is created and put into place.
