Trump's tariffs might amount to the biggest U.S. tax hike since the 1980s

A stock trader reacts to Trump's tariffs on the NYSE
(Image credit: Don Emmert/AFP/Getty Images)

Acting White House Chief of Staff Mick Mulvaney insisted Sunday that President Trump is "absolutely, deadly serious" about levying a 5 percent tariff on all Mexican imports next week, rising monthly until they hit 25 percent, if Mexico doesn't stop migrants from crossing the U.S.-Mexico border. That's great news for fans of regressive taxation.

Tariffs are paid by U.S. importers, and several economic studies have concluded that most or all of Trump's tariffs so far have been paid for by U.S. companies or consumers. Eventually, consumers will pay the tax on cars and trucks, TVs, beer, and avocados from Mexico. The U.S. imported $346.5 billion of goods from Mexico in 2018, so a 5 percent tariff equals a $17 billion tax on Americans, while 25 percent would add up to $87 billion. And it's not clear Mexico could "substantially stop" migrants, even if it wanted to, especially before October.

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