President Donald Trump’s tariff plan shocked Wall Street, shocking U.S. trading partners and scaring Americans to check retirement accounts.
It’s also very confusing: Announcement that he will implement huge tariffs in full (for reasons That doesn’t make any sense), Trump backed down some tariffs before he was ready to take effect. But he still Start a trade war with Chinaand tariff rates in many other countries Stay much taller than them Before the whole legend begins.
Throughout the process, Trump and his allies suggested that when tariffs damage Wall Street, they would have a Positive impact on small businesses on the “street”. The logic is that only the rich own stocks and own 401(k), so they feel the pain of the plunge market.
But that’s Incorrectnot only Wall Street, but also these tariffs. That’s not because tariffs are always bad. As I wrote last week Tariffs can be used well If implemented in a narrow and strategic way to help support certain industries, that’s why some industries Unions support stricter tariff ideas. But Trump’s plans are too broad, and it’s unclear that he even Hope it happens Be with them.
In fact, the people who are most affected by Trump’s tariffs are the poor. That’s true Low-wage workers Due to the negative impact of tariffs on trade, they may lose their jobs in developing countries around the world as factories shrink or close. There are at least two reasons, as are low-income families in the United States.
How Trump’s tariffs will hurt low-income Americans
There are two ways in which tariffs can harm low-income people:
- The first and most obvious impact of Trump’s tariffs is that they will increase the prices of daily commodities. Tariffs as excise tax – taxes people end up paying at checkout counters, as businesses may raise prices to offset their tariff bills. Unlike income tax adjusted for the amount earned by the family, everyone pays the same fee for the same goods.
according to Yale University’s Budget LaboratoryAnalyzing the impact of the original tariffs announced a week ago, ordinary American households will be charged about $3,800. For the lowest income households, the cost of living imposed by the tariffs is lower (approximately $1,700), due in part to their lower overall spending.
But they will Pay more share of income Going towards prices. For example, households with a minimum of 10% by income by income will use 4% of their disposable income for tariffs, while the top 10% of households can only pay 1.6%. (The impact would be smaller if Trump reversed some of his tariffs altogether, but the overall trend would be the same: Low-income people will bear the biggest burden.)
- The second potential impact of tariffs is on the health of the broader economy. Economic forecasts immediately showed when Trump announced his initial tariff plan on what he called “liberation day” Increase the possibility of a recession. Economists are also worried about new Tariffs may cause stagnation – A combination of high inflation, rising unemployment and stagnant economic growth.
When Trump stopped implementing some of his tariffs, Goldman Sachs retreats into recession forecasts. But given the still high tariffs and instability in global financial markets – the recession is still on the seat.
If the recession does come true, Low-income families will endure Be the first to bear the brunt. During the recession, The number of poor people increases;During the Great Recession between 2007 and 2009, the number of people Living below the poverty line An increase of nearly 5 million. The job market can also be a bigger challenge for those with low incomes. Unemployment can not only lead to long-term unemployment sometimes, but also Workers without a college degree – Who tends to have far fewer college-educated workers and are more likely to find new jobs with lower wages than before.
The good news is that all of this is reversible. The bad news is that it relies heavily on Trump’s change of mind, although as we’ve seen this week, it’s always possible.
There are two other ways to change.
this First of all, Congress: At least seven Republican senators signed before Trump returns to his ‘liberation day’ commitment Bipartisan bills limit power on presidents Tariffs are imposed. This is unlikely to work, partly because the bill is still there 60 votes are missing It needs to pass the Senate, and because Trump’s sudden turnaround relieved some of the obstacles received by his initial tariff plan.
The second is the court: federal courts have the potential to lower Trump’s tariffs, which are not popular even in some right-wing circles. For example, a liberal has Prosecution against Trumpclaiming that he is Abuse of his emergency powers.
But the fastest and most likely change can only come from Trump himself, and it is difficult to predict what he will do next. Meanwhile, his latest tariff policy fully demonstrates Trump’s priorities: Reimburse the poor and reduce taxes.
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