CNBC's Squawk Box reports on a conservative study showing that Trump's tariffs “would amount to one of the biggest tax hikes since at least the 1980s”
Steve Liesman explains that if Trump is elected, “nothing stands in the way of ... across-the-board 20% tariffs,” which the Cato Institute also said “would be extremely damaging to the economy”
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From the October 22, 2024, edition of CNBC's Squawk Box
JOE KERNEN (CO-HOST): New estimates of the revenue raised from former President Trump's proposed tariffs would make it potentially one of the biggest tax hikes in decades. And senior economics reporter Steve Liesman joins us with the details. Hey, Steve.
STEVE LIESMAN (CNBC SENIOR ECONOMICS REPORTER): Good morning, Joe. Yeah, the conservative American Enterprise Institute says the tariffs proposed by former President Trump — 20% on all imports to the U.S. across-the-board — would cost Americans as much as $3.9 trillion. Kyle Pomerleau, a senior fellow at AEI, says that would amount to one of the biggest tax hikes since at least the 1980s. He says, "It would be like any other tax increase. It will have a negative impact on growth and employment, and also hurt U.S. exporters."
Now, President Trump has said that the tariffs are paid by foreign companies and would boost U.S. growth by bringing manufacturing back to the U.S. Most economists from the right and the left disagree. In fact, conservative economists who find other parts of the Trump agenda — like tax cuts — will boost growth, say the tariffs could nearly offset all of those pro-growth policies and their benefits.
A paper by the conservative Cato Institute says, quote, "such aggressive protectionism would be extremely damaging to the economy and broader foreign policy goals." Trump would have almost unilateral authority to enact these tariffs. Even while the Constitution gives Congress the sole authority to raise revenue, it has essentially ceded tariff authority to the executive branch over the decades. Clark Packard of Cato tells me that all the president has to do is declare a national emergency, and he can implement any tariffs that he likes. The law doesn't specify what constitutes a national emergency and courts have been reluctant to review such findings. Now, Packard says those tariffs can last a year. The president can just declare it again. Congress has the ability to override it but needs a veto-proof majority. Recent efforts by Congress to take the authority away from the president have failed. So, nothing stands in the way of President Trump and across-the-board 20% tariffs if that's what he wants to do.
It remains possible, as some Trump surrogates have said on our air here, that tariffs are a negotiating tactic. But the former president has talked about them more as policy and his other plans appear to count on the tariff revenue, Joe. So, that's what people are saying about these tariffs right now.