Barackface: 26: Tariff

It’s time to unmask the Trump tariffs for what they really are: A giant national sales tax that will hobble U.S. economic growth Buckle up, Americans. You’ve just been ambushed by a federal money grab that this nation hasn’t witnessed in recent history, the equivalent of a national sales tax—branded under another name. This version’s a giant revenue raiser that deficit-ridden Washington is likely to get hooked on. In fact, it’s looking more and more like America’s answer to Europe’s fatal attraction that’s long been the leading enabler for the region’s extremely high levels of government spending: the value-added tax—the VAT. As I’m sure you’ve guessed by now, we’re talking about the Trump tariffs. And you can forget about foreigners picking up the tab for the tariffs. It’s Americans who will. .......... According to a wide range of forecasts, this new nationwide sales levy will yank back from consumers’ wallets about half the projected tax savings from the One Big Beautiful Bill’s extension of the 2017 Trump tax cuts. ........... These taxes come in two forms: A few nations, including Pakistan and Myanmar, deploy a simple countrywide tax similar to America’s state sales taxes. But the most common type by far is the value-added system imposed in stages at each level of production. It’s a bedrock of the regimes in France, Germany, and virtually every other EU country. The VAT is a formidable revenue generator that has fueled government spending in Europe and imposed a huge drag on its nations’ growth. ......... The U.S. is highly unusual in that it’s never had a VAT or in the postwar era, anything resembling a major national sales tax. This stand-alone status in shunning the former likely explains why America’s federal spending stands at least 10 percentage points lower as a share of GDP than the lions of Europe. But the Trump tariffs mark a historic shift to an effective national sales tax. By employing huge tariffs, Uncle Sam is embracing a tax that’s virtually never been used at remotely this scale by any other major economy in recent history. .......... Although tariffs were an important source of federal funding from the 1880s to just after World War II, they’ve amounted to a relatively small portion of U.S. federal receipts ever since. In 2024, even though the Biden administration retained most of the tariffs from Trump’s first term, the average U.S. tariff ran at just 2.5%, raising only $77 billion, or around 1.6% of all federal tax proceeds. .......... They’re collected at U.S. ports of entry by the U.S. Customs and Border Protection agency and are paid entirely by American importers. Under the Trump plan, the rates vary greatly even for the same goods, depending on what country they’re arriving from. On aluminum and steel, we’re charging Canada 50% and the U.K. “just” 25%. Typically, importers tack the tariff cost onto the price of their products in auto showrooms, grocery chains, and megastores. Hence, they raise the bill for American consumers at checkout counters. .......... Tariffs are “indirect” taxes embedded in retail prices, like VATs, and are not added at checkout. Sales taxes, on the other hand, are tacked on at the point of sale and visible on receipts, and usually spark outrage when they are increased. A danger of tariffs is that they could become a VAT-like way to hike taxes on the sly. ......... All told, according to the Budget Lab at Yale, the Trump administration has raised the average effective tariff rate to 18.6% for Americans. This towering figure is approaching the devastating 19.8% rate imposed by the Smoot-Hawley Tariff Act of 1930, a notorious measure that helped sink the U.S. economy during the Great Depression. ............ According to the nonpartisan Tax Foundation, by the end of 2025, the run rate is predicted to be $210 billion annually. That’s a big number. It equates to over 9% of personal income taxes and 40% of corporate taxes paid in 2024. According to the Budget Lab at Yale, the Trump tariffs will lift a total of $2.7 trillion from Americans’ pockets through 2034. ......

The Trump tariffs will amount to one of the largest tax hits in U.S. history.

........... According to the nonpartisan Congressional Budget Office, the extension of Trump’s reductions will reduce taxes by around $400 billion relative to what they would have been next year. Trump’s tariffs will grab back half of those savings via the $200 billion–plus tariff smack in 2026. So Trump’s putting more money in families’ pockets with one hand and taking a big chunk of it back with the other. ............. Inflation is defined as a broad-based, persistent increase in a nation’s general price level. It is not triggered by taxes, whether they’re sales taxes or de facto sales taxes, like tariffs. Instead, as legendary economist and Nobel laureate Milton Friedman famously stated: “Inflation is always and everywhere a monetary phenomenon.” Indeed, we have never observed significant inflation, a period in which the annual inflation rate exceeds 4% and lasts for at least two years, in any country in which the money supply has not significantly increased prior to the outbreak of inflation. ............ Just consider our last bout of inflation in the United States. Following the pandemic, the U.S. money supply, measured by M2, experienced the fastest rate of peacetime growth since the Fed’s founding in 1913. The annual growth rate of M2 peaked in February 2021 at 26.7%, and that annual rate averaged a stunning 21.0% from February 2020 to February 2021. As night follows day, inflation surged. In 2022, it peaked at 9.1% per year in June, and it averaged 7.0% per year between April 2021 and December 2022. The inflation wasn’t temporary and wasn’t caused by supply-chain “glitches,” or a variety of any other nonmonetary factors that were thrown up as explanations for the inflation episode. It was caused, pure and simple, by the surge in the money supply. ........... While tariffs will increase the relative prices of imported goods and services, they will not change the overall price index. The Trump tariffs will simply force Americans to spend more on cars, products made from steel and aluminum, European wines, and all other items heavily taxed at our borders. Unless the money supply is goosed, Americans will have less to purchase products and services that aren’t shipped from abroad—everything from domestic plane tickets to restaurant meals to soft drinks. It will be more or less a wash, with the extra money spent on tariffed goods matching the drop in what’s spent on everything else. The specter of inflation will only reappear if the Fed balloons the money supply. .......... The president’s arguments are incorrect. It is all in the arithmetic. The deficits are bulging because Americans spend more than this nation produces domestically. The truth is revealed by a famous economic identity. Spending falls into three categories: consumption, investment, and government expenditures. Whereas the value of all goods and services produced is equal to the gross domestic product (GDP), the gap between the aggregate spending (C+I+G) and GDP is by definition equal to the difference between exports and imports. ......... And the numbers work perfectly. In 2024, the difference between what the U.S. spent ($31.2 trillion) and what it produced ($30.33 trillion), was $872.5 billion. That precisely equaled the overall trade deficit. ........... Put simply, the deficit arises from a choice we’ve made as Americans to consume much more than we make. It is not the result of nefarious activities by foreigners. In short, since 1974, the U.S. has witnessed a trade deficit each year, all made in the USA. .......... As it turns out, these deficits have been easy for the U.S. to finance. Foreigners are more than willing to send capital to the U.S. so that the funds can be invested in dollar denominated assets by purchasing U.S. stocks, corporate bonds, and apartment complexes, to name a few places where foreign capital flows in and rests in the U.S. All of this is part of the exorbitant privilege associated with possessing the world’s premier currency. ............... Like all taxes, the tariffs will impose a drag on economic growth. Not surprisingly, the Yale Budget Lab forecasts that the extra duties will slow GDP growth by a substantial 0.4 percentage points per year over the long run. That would amount to a huge hit to the average annual growth rate of 2.2% that the U.S. has experienced since 2000. ...........
Americans are about to shoulder a big, unadvertised, stealth tax hike.
This nation is the world’s most abundant supermarket, offering the best prices and greatest variety of goods on its shelves. The Trump tariffs are poised to create a far more limited and expensive marketplace by sweeping from those shelves the best bargains arriving from across the globe. ........... Steve H. Hanke is a professor of applied economics at Johns Hopkins University. He served on President Ronald Reagan’s Council of Economic Advisors.

Trump is crowing about his tariffs reducing the debt by $4 trillion. But there are some caveats
India reconsiders Russian oil imports as U.S. tariff hike nears - report
Maduro Cites Rubio’s ‘Madness’ and Sends 15,000 Troops to Border

The Convergence Age: Ten Forces Reshaping Humanity’s Future
Kalkiism: The Economic And Spiritual Blueprint For An Age Of Abundance
The Last Age: Lord Kalki, Prophecy, and the Final War for Peace
The Protocol of Greatness (novel)
A Reorganized UN: Built From Ground Up
The Drum Report: Markets, Tariffs, and the Man in the Basement (novel)
World War III Is Unnecessary
Grounded Greatness: The Case For Smart Surface Transit In Future Cities
The Garden Of Last Debates (novel)
Deported (novel)
Empty Country (novel)
Trump’s Default: The Mist Of Empire (novel)

The 20% Growth Revolution: Nepal’s Path to Prosperity Through Kalkiism
Rethinking Trade: A Blueprint for a Just and Thriving Global Economy
The $500 Billion Pivot: How the India-US Alliance Can Reshape Global Trade
Trump’s Trade War
Peace For Taiwan Is Possible
Formula For Peace In Ukraine
A 2T Cut
Are We Frozen in Time?: Tech Progress, Social Stagnation
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption
AOC 2028: : The Future of American Progressivism

Listen to "Fortress America: Global Trade Re-Routes" by Tech, Politics, Business And Faith. https://t.co/s48PBKRAIj
— Paramendra Kumar Bhagat (@paramendra) August 25, 2025

Trump’s downfall Fascist capitalism will do him in ...... Trump is on the way to occupying Democratic-led cities with the Army, National Guard, and ICE — in what appears to be a dress rehearsal for the 2026 midterms. ........ He is telling Republican states to super-gerrymander in order to squeeze out more Republican seats in Congress, to help retain Republican control of the House after the 2026 midterm elections. ......... He is trying to silence criticism from universities, museums, law firms, and the media. And targeting critics for prosecution, such as Adam Schiff and John Bolton. ........... His White House has even created a scorecard that rates American corporations on how loyal they are to Trump. Corporations with “strong” ratings (among them, Uber, DoorDash, United, Delta, AT&T, and Cisco) are to be rewarded with tax and regulatory benefits, while “low” rated corporations could face retribution ranging from Justice Department and regulatory lawsuits to damaging executive orders, harsh regulations, and unbridled scorn from Trump. ................. Before they poured money into Trump’s initiatives and PACs, many Big Tech corporations were facing federal investigations and enforcement lawsuits. Those investigations and lawsuits are now being dropped. ....... In sum, an increasing part of our economy is no longer being determined by supply and demand but by the deals Trump is striking. .......... Authoritarians rely on vast bureaucracies to control industry, as does China’s Xi Jinping....... But the new order being imposed on American industry doesn’t come from a vast authoritarian bureaucracy. It’s personal and arbitrary. A single so-called “strongman” is beginning to control everything............ State capitalism? Fascist capitalism? ........

his arbitrary and mercurial decisions are making the private sector nervous about investing in the U.S. economy, causing global lenders to demand a higher risk premium for lending to the U.S., and pushing the economy toward both inflation and recession — so-called “stagflation.”

........
If nothing else brings him down, the economy surely will.

Barackface

Pages

Tuesday, August 26, 2025

26: Tariff

The Trump tariffs will amount to one of the largest tax hits in U.S. history.

Americans are about to shoulder a big, unadvertised, stealth tax hike.

his arbitrary and mercurial decisions are making the private sector nervous about investing in the U.S. economy, causing global lenders to demand a higher risk premium for lending to the U.S., and pushing the economy toward both inflation and recession — so-called “stagflation.”

If nothing else brings him down, the economy surely will.

No comments: