Mint Quick Edit | Trump’s tariff self-goal: Americans have had to pay a heavy price

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Tariffs are effectively a consumption tax on one’s own people. (iStock)

Summary

Economists had warned that tariffs are a tax on one’s own people. A new study has put numbers to it: US consumers have borne almost the entire burden of Trump’s trade barriers. But unless US inflation flares up, he may refuse to budge on his favourite policy tool.

A study by the Kiel Institute for the World Economy has corroborated what economists had been shouting out loud but US President Donald Trump chose not to hear: that tariffs are effectively a consumption tax on one’s own people.

The Germany-based institute examined US imports worth about $4 trillion to conclude that as much as 96% of the $200 billion of additional revenue the US generated last year was yanked out from the pockets of US consumers—only 4% of the burden was borne by exporters.

It also analysed data of Indian exporters to see how they responded. It found that they cut shipment volumes but not the price of their goods, showing that they chose to protect their margins.

Some of the volume losses would have been made up by tapping new markets. But the world’s losers have been American consumers, for whom Trump’s tariffs have meant only pain and no gain.

Far from easing up, though, he seems ever-ready to double down on them, his tariff threats against Europe being only the latest example. Luckily for him, tariffs haven’t shown up in US inflation data yet. Once that happens, and it’s likely, Trump may find it hard to justify them. Until then, it’s barriers ahoy!

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