Trump leans on tariffs to boost US economy

Donald Trump's plan for the economy boils down to one word: tariffs.

The former president believes raising tariffs on imports — 60% on goods from China and up to 20% for everybody else — would allow the United States to "steal" manufacturing jobs that have gone overseas, NPR said. "We're going to bring thousands and thousands of businesses and trillions of dollars in wealth back to the good ole' USA," Trump said in a Georgia speech. But some economists warn that a tariff-driven economy "may hurt American consumers by making things more expensive," NPR said.

Trump frequently invokes former President William McKinley, said Yahoo Finance. "In the 1890s, our country was probably the wealthiest it ever was because it was a system of tariffs," Trump said in Michigan. Historians, though, note that tariffs largely went out of fashion for a century after McKinley's presidency. The tolls were "increasingly seen by the public as raising prices," said Yahoo. One tariff historian said McKinley's economic governance is now widely seen as a "cautionary tale."

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Counter to 'traditional economic orthodoxy'

Those views "reflect traditional economic orthodoxy, not reality," John Paulson, a Trump advisor, said in The Wall Street Journal. Tariffs would "stimulate job growth and increase revenues" without raising taxes on Americans, which in turn would cut the deficit and reduce inflation. Adding tariffs to other parts of Trump's economic agenda — making the 2017 tax cuts permanent, cutting federal regulations — would help "everyday Americans buy homes, save for retirement and raise their standard of living," Paulson said.

Among economists, there is widespread skepticism. "Ignore the word 'tariff' — Trump is pitching higher taxes," Allison Morrow said at CNN. Many experts see tariffs as an "inefficient, unfair tax on poorer people" who spend a greater portion of their income on imported goods. "Study after study" has demonstrated that the Chinese tariffs Trump imposed in his first term were borne and paid almost entirely by American consumers, Morrow said. Trump disagrees. "To me, the most beautiful word in the dictionary is tariff," he said at the Economic Club of Chicago.

Considering the benefits of tariffs

Tariffs are Trump's "most misunderstood policy proposal," American Compass' Oren Cass said at The Atlantic. The economists who criticize the idea "consider only the costs of tariffs and not the benefits." Restoring America's manufacturing base by discouraging imports has benefits: shortening supply chains and serving national security by strengthening the defense-industrial base. Most of all, tariffs would encourage consumers to buy from a company that "pays American taxes and supports American families in American communities," Cass said.

Some of those same companies might also suffer. Trump's tariffs could trigger a trade war — retaliatory tariffs from other countries — that would result in "diminishing sales for U.S. exporters," said ABC News. Exports account for about 10% of the American economy. A trade war would have "employment effects for people working in those sectors," said American University's Kara Reynolds. Trump's tariffs in his first term ended up hurting U.S. soybean sales abroad, for example. Trump, though, sees mostly upside: "We're going to have thousands of companies coming into this country," he said.