Cnn
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The help of the White House, Peter Navarro, said on Sunday that he expected that President Donald Trump’s prices Reporting revenues of 6 billions of dollars in the next decade, which could equip the biggest Tax hike in American history.
Even when adjusting inflation, this amount would be the triple of the increase in the tax set in 1942 to pay the cost of fighting the Second World War.
Navarro, Trump’s main advisor for trade and manufacturing, insists that it is not an increase in tax but a tax reduction – echoing the repeated belief of the Trump administration that prices will be paid not by American consumers but by companies from other countries or countries themselves.
“The message is that prices are tax reductions, prices are jobs, prices are national security,” Navarro said on Fox News on Sunday. “The prices are perfect for America. They will make America again large. ”
But most economists say The prices imposed in the United States are paid by American companies and consumers in the form of higher prices on imported goods, not paid by foreigners.
Trump plans to announce additional rates on Wednesday, which he nicknamed “Liberation Day”, on all kinds of imported goods in retaliation for what he considers unjust obstacles to American exports to other countries. Trump has already announced prices on all goods from China, Mexico and Canada, and this week, a 25% rate on all imported cars should take effect.
Navarro said the prices are preparing the ground so that the tax reductions are adopted by the congress later this year, but that the pricing income figures that Navarro have cited would constitute a huge increase in tax for short -term Americans, if they occur.
Un automatic rates alone “will raise around $ 600 billion (per year), around 6 dollars over a period of 10 years,” said Navarro. Cars, he said, add an additional 100 billion per year.
We do not know how Navarro calculated this annual figure of $ 700 billion, because the details of these prices have not yet been fully disclosed. It is not clear either, and perhaps improbable, that The Americans will continue to buy so much imported goods if prices are increased due to the cost of prices.
To reach the estimate of Navarro, it would take a price of 25% on almost 3.3 billions of dollars of goods imported by American companies and consumers in 2024. And that will not happen.
Canadian energy imports will be affected by a 10%rate, not 25%, and Canada is the largest source of oil imports in the country. Chinese products will mainly have a tariff of 20%. In addition, Trump said that all goods would not be affected by prices – only goods from countries that have what the administration considers “unfair” trade policies to the United States.
In addition, Trump’s approach on the scale of prices so far means that the effective rate can not Be able to bring in $ 700 billion anyway. Deadlines to take them can be delayed, and some countries may conclude agreements with the Trump administration to eliminate prices, for example.
In addition, the figure of 6 billions of dollars implies that the Americans would not change their purchasing behavior. This is exactly what prices are intended to do: bring consumers to buy from the United States (and to obtain foreign and multinational companies to move production to new American factories).
So, at this stage, it is simply not possible to know exactly how many America revenues will bring prices.
But even if Navarro’s proposed figure is extremely inflated, the cost of prices on a dollar basis is always likely to represent a huge increase in tax contrary to everything that we see in American history.
As a percentage, the 1942 tax bill which collected funds to fight against the Second World War is the highest increase in tax in the history of the United States, according to a 2006 analysis of the Treasury Department. This collected $ 10 billion per year in 1942, or 200 billion dollars today when it was adjusted for inflation.
However, at the time, This increase in tax was a much greater share of the country’s gross domestic product, the wide measure of the country’s economic activity. It was equal to around 5% of the GDP of 1942 according to the analysis of the Treasury Department; Today, $ 600 billion would only represent 2% of the current GDP.
In dollars, the highest previous increase – not adjusted for inflation – is the affordable care law. Also known as Obamacare, the ACA was adopted in 2009 and at that time, it had to increase tax revenue by $ 486 billion.
But that exceeded a period of 10 years – less in a decade than Navarro only provides Trump prices will increase in one year. In addition: one of these tax increases under ACA, a penalty on Americans who have not received health insurance, were then repealed by the Congress, reducing the tax impact of this law.
Critics of Trump administration pricing plans say they will create enormous cost increases for American consumers and will be an obstacle to the economy.
“It’s a tax,” said senator Mark Warner in an interview on Fox immediately after the appearance of Navarro. “This money does not fall from the sky. This money comes because (the price of) these products will increase, the Americans will pay more. We are talking about a tax of $ 700 billion,” he said, adding the $ 100 billion which, according to Navarro, say that specific auto prices will increase the first year.
“This insults the intelligence of the American people when it says that the government will collect $ 700 billion a year,” he said, “and in a way it will not arise in cost.”
The automotive industry was a major objective for the Trump administration in its strategy to increase prices.
“We are going to raise around $ 100 billion with car rates alone,” predicted Navarro on Sunday.
In addition to the 25% rate on all imported cars announced last week and scheduled to take effect this week, Trump said that he was soon planning to impose additional prices on imported automotive parts, which are used in each car built in an American assembly plant.
Navarro said the administration then planned to provide tax credits to people who buy “American” cars. He did not specify what car purchases would be eligible for such a tax credit. No car built in a automotive assembly plant in the United States is only manufactured with American parts. Most depend on the parts imported for more than half of their content.
Although Navarro claims that these samples will force car manufacturers to comfort themselves with American factories and create jobs here, experts and managers of the automotive industry say that change would take years to accomplish, if that happens. In the meantime, American automotive jobs could be lost.
