Trump’s tariff plan to fund tax cuts

A very good video from the Wall Street Journal explaining the economics behind Trump’s economic plan to put across-the-board 60% tariffs on everything from China and 10%-20% on everything else from the rest of the world. Some of the key points are:

• 1960’s US v West German Tariff war – US Chicken and German trucks (Volkswagen)

• 2018 – Tariff on washing machines into US – consumer pays more but domestic producers put up their price and price of dryers (complementary goo). A myth to think that domestic producers won’t change their prices. You create more demand so price goes up

• Tariffs did create jobs – Samsung and LG opened plants in US – collected $82 million in tax but it costs consumers 1.5 billion more – US paid $815,000 per job

• 2018 – big tariff on Chinese steel and aluminium coming = higher costs for US producers = higher prices for consumers

• 60% tariff on everything from China could mean – cost to average American household = $1,700 from higher prices. 684,000 jobs lost

• Issue of retaliatory tariffs from other countries

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