Economist Justin Wolfers is pushing back against President Donald Trump’s characterization of surging tariff revenues as a budget “windfall,” saying that American businesses and consumers will eventually bear the costs.
Tariffs Are Just ‘A Tax’
On Tuesday, in a post on X, Wolfers shared a snippet featuring his latest appearance on CNN’s The Lead With Jake Tapper, where he argued against Trump’s claims.
“Calling tariff revenue a ‘windfall' is like calling your speeding ticket a bonus for the police budget,” Wolfers said, adding that while the tariffs might be a source of revenue for the U.S. Federal Government, they are a tax for consumers and businesses. “But for you, it’s a tax.”
Last week, Trump celebrated a report by the Congressional Budget Office, which said that the tariffs that this administration imposed will reduce primary deficits by $3.3 trillion through 2035, which, in addition to $700 billion in lower interest costs, could lead to a total reduction of $4 trillion.
While Wolfers did not dispute this claim, he reiterates his point that Trump’s tariffs are essentially a tax on Americans. “When you charge people a tax, the government gets revenue. It's as simple as that,” he says.
While Trump has claimed foreign producers bear the burden of tariffs, Wolfers argues otherwise. “Not surprising that that has not fallen a penny,” he said, referring to the Import Price Index. “What that means is that Trump's promise that foreign companies would pay this tax turned out to be false.”
Wolfers believes that importers in the U.S. will eventually pass on the cost of tariffs to consumers. “Either way,” he says, “the cost is being borne by Americans.”
Most Regressive Form of Taxation
Several prominent experts, economists and analysts have echoed the same in recent weeks, with Ross Gerber, the CEO of Gerber Kawasaki Wealth and Investment Management, referring to the tariffs as a regressive tax, one that disproportionately impacts households with lower disposable incomes.
In a post on X last week, Gerber said the tariffs essentially move “the cost of taxes from the rich to the rest of America,” thus making it very regressive.
Investor Kevin O’Leary has referred to the tariffs as a “Value-Added Tax.” He says, while Trump might call it tariffs, “The Europeans and the Canadians call theirs VAT. Who cares what it’s called? It’s a tax.”
Photo Courtesy: Dilok Klaisataporn on Shutterstock.com
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