Donald Trump says he will hit China, Mexico and Canada with new tariffs after his inauguration on 20 January. He will sign an executive order imposing a 25% tariff on all goods coming from Mexico and Canada.
1- No one
can deny that before the federal income tax was established in 1913, tariffs
were a major revenue driver for the government. From 1790 to 1860, tariffs
accounted for 90% of federal revenue. Tariffs fell out of favor as global trade
grew after World War II. The government needed vastly bigger revenue streams to
finance its operations. Still, Trump wants to enact a budget policy that
resembles what was in place in the 19th century.
2- In the
fiscal year that ended Sept. 30, the government is expected to collect $81.4
billion in tariffs and fees. That’s a trifle next to the $2.5 trillion that’s
expected to come from individual income taxes and the $1.7 trillion from Social
Security and Medicare taxes.
3- Tariffs
can also be used to pressure other countries on issues that may or may not be
related to trade. In 2019, for example, Trump used the threat of tariffs as
leverage to persuade Mexico to crack down on waves of Central American migrants
crossing Mexican territory on their way to the United States.
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4- Trump
sees tariffs as a way to prevent wars. If another country tries to start a war,
he said he’d issue a threat: “We’re going to charge you 100% tariffs. And all
of a sudden, the president or prime minister or dictator or whoever the hell is
running the country says to me, ‘Sir, we won’t go to war.’
5- Trump
asserts that tariffs —basically import taxes — will create more factory jobs,
shrink the federal deficit, lower food prices and allow the government to
subsidize childcare.
The tariffs
on Mexico and Canada will remain in place until the two countries clamp down on
drugs, particularly fentanyl, and migrants illegally crossing the border, Trump
said in a post on his Truth Social platform.
“Tariffs are the greatest thing ever invented,’’ Trump said that last Sep in Flint, Michigan.