The president announced a 5% tax on Mexican imports unless Mexico halts all unauthorized border crossings — the tariffs would rachet up to 25% in the coming months
PHOENIX (AP) — The biggest victims of President Donald Trump’s tariffs won’t necessarily be Mexicans or Chinese or young urbanites who will have to pay more for avocado toast.
The people likely to pay the steepest price for Trump’s attempts to bend Mexico and China to his will are poor Americans, who already live close to the financial edge and could have to pay more for everyday purchases.
For many low-income households, tariffs “are a tax on their consumption, and by raising the cost of their consumption, they will likely have to cut back,” said Jay Shambaugh, a senior fellow at the Brookings Institution.
The president last week announced plans to impose a 5% tax on Mexican imports unless that country halts all unauthorized border crossings into the United States. The tariffs would rachet up to 25% in the coming months if Mexico fails to stop the flow of immigrants and asylum-seekers.
The threat of higher tariffs follows a decision in May to hike tariffs to 25% from 10% on Chinese imports, a move designed to increase pressure on China to agree to more favorable trading terms with the United States.
But rather than force concessions from China and Mexico, the tariffs could boomerang on U.S. consumers and companies. The taxes could raise the price of fruits and vegetables and disrupt the supply chain for auto parts in ways that could hurt vehicle sales.
That would be hard on people like Walter Rogers, a 65-year-old retiree living in Phoenix on a Social Security check he says is about $700 a month.
“We just got a cost-of-living raise. Now they’re going to raise prices?” Rogers said as he walked to Walmart. “Hardly anybody can afford this.”
Executives at Walmart and dollar-store chains, which import much of their merchandise and serve many low-income customers, have warned that tariffs could lead to higher prices.
A 2017 research paper co-authored by Shambaugh found that tariffs would eat up a greater proportion of the incomes of the bottom 10% of households. The burden would be much lighter for those higher up on the financial ladder.
The findings — which are backed by most economists — stand in sharp contrast to Trump’s misleading claim that foreign countries are paying the tariffs. In reality, the taxes are passed along to consumers and companies in the form of higher prices and reduced economic activity that can stifle overall growth.
There are two major reasons why the poor face an outsized burden, Shambaugh said.
First, poorer Americans tend to spend all of their income, while wealthier Americans have enough income left over to save and invest. That leaves the poor more exposed to higher prices from import taxes.
Second, the wealthy are more likely to splurge on services such as farm-to-table restaurant meals or gym memberships that are not subject to tariffs at all. But poorer Americans spend a higher percentage of their income on basics such as clothing and groceries that are more likely to be imported and subject to tariffs.
Marlene Grimes has noticed higher prices for dairy goods and vitamins at the drugstore near her Phoenix apartment. If prices go even higher, she said, she would have to visit the local food pantry more often.
“I’m on a fixed income,” said Grimes, a 74-year-old retiree. “If it goes up on what you buy, you just don’t buy it.”
During a period of widening income inequality, Trump’s plan to levy tariffs will complicate the legacy of this 2017 income tax overhaul, his signature policy achievement.
Administration officials repeatedly pledged that the middle class and poor would benefit from lower tax rates, but the chief beneficiaries of the overhaul so far have been the wealthy and corporations. Any tax savings realized by the poor could be eaten up by higher prices from tariffs, according to an analysis being released this week by the Tax Foundation, a right-of-center think tank in Washington.
Assuming a 25% tax on both Chinese and Mexican imports, the bottom fifth of households would probably be worse off under Trump than they were during Barack Obama’s presidency, said Kyle Pomerleau, chief economist at the Tax Foundation. Wealthier households would likely be insulated from the tariffs and could keep most of their savings from lower income taxes.
“You’re looking at an administration that may have raised taxes on the bottom 20% and cut taxes for the top 1%,” Pomerleau said.
Tariffs on Mexico would be especially tough on Arizona, which imported $9 billion worth of goods from its southern neighbor last year, nearly three times as much as from its next closest trading partner, China. The historically Republican state voted narrowly for Trump in 2016, but in last year’s midterm elections Democrats picked up offices they had not won in decades. Arizona is expected to be a battleground in the 2020 presidential election and will have a crucial Senate contest.
Republican Gov. Doug Ducey generally opposes tariffs but has avoided criticizing Trump’s threat, saying national security is more important than commerce.
“Our economy is doing terrific. Our economy is going to continue to do terrific,” Ducey told reporters Monday.
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There was no tax savings even before the tariffs.
Trump is a devil worshiper. He needs to be sodomized with Satan’s pitchfork.
Nah, replace Trump with Banker fucking scum or Wanking Bankers and you’re good to go.
Carry on and arm up now!!!!!
Stopping the floodgates from all over the world to here is a HUGE issue. Assuming Mexico can actually stop this stuff or at least severely limit it, then if it works then great. The poor folks that are near the bottom, for the most part don’t work, or barely work plus Gov’t bene’s. Also a huge percentage that vote, probably vote Demo. So politically it probably isn’t a big hit. I rarely ever see anything we buy from Mexico, its much much harder to avoid buying Chinese stuff–its everywhere.
Demo commies are going to say that only the top 1% got tax breaks until they can’t speak anymore. Meanwhile nearly 50% of the country pays ZERO Federal taxes. A big bunch of the folks struggling live off playing the gov’t Free shit game. They get all the free stuff, they get all their kids diagnosed with a mental health diagnosis then start collecting SSI checks for every single kid. I used to see families of 5 all with some sort of bullshit diagnoses, getting 680$/month per kid. Plus they would be diagnosed as well. So they would be bringing in 4k just in SSI, nearly free housing, lots and lots of other stuff, plus work side jobs cash. A lot of people work the system and teach it to eachother and their kids, to become permanent victims, and gov’t subsidized drinkers, weed smokers etc. They do a hell of alot better than the working poor, who don’t make enough to get anything from gov’t, and don’t game the system.
I can do without avacados. Maybe Mexico will start to stop illegals, they certainly haven’t tried very hard thats for sure, if anything they want it to happen.
It shouldn’t be up to Mexico.
USians pay ginormous amounts for military “defense”: more than the rest of the world combined, it’s often been stated. So there’s no reason whatsoever for a porous border unless that is what is ultimately desired.
An open border is desired by all democrats (bringing more eventual democrat voters) and corporate-bought republicans – which is most of them. The people want the invasion stopped. That’s why they elected Trump and that’s why they’ll re-elect him. Trump has been tied down like Gulliver, and he’s made the mistake of signing continuing resolutions that allow the status quo to remain. It SHOULD be up to Mexico. If that’s unfair to them, tough fucking shit. They need to seal their southern border, and if they don’t want 25% tariffs, they’ll figure out a way to stop Mexicans from sneaking into the US. We should tax the shit out of remittances, too.
But in the long run it will be better for them. No one is smart enough to look at the entire formula–they only look at one side of the issue. People need to do more critical thinking…..
Exactly !! A glut of unskilled, manual labor brought about in large part by illegal/criminal immigrants has destroyed decent paying jobs by the millions and stagnation in wages. Carpentry, landscaping, painters, roofers etc etc etc…all jobs that could help support a family 50 years ago and even 25 years ago could live above poverty ( especially if married)– these jobs are now below poverty level as 2 or 3 illegals will work for the equivalent of 1-American on a living wage.
Spend an extra $5 on a $100 purchase at Walmart now but reap thousands in the future…. those who don’t see this are myopic ( or just have a pro-immigrant agenda.)
Yep, Many years ago Illegals took over the trades by working for peanuts.
The controlled opposition fraud liar-in chief is a talented actor. Most likely his handlers came up with this sick idea. The POS is screwing all the “little people” Lots of food imported from Mexico will be more expensive. And this while the record flooding in the corn belt on its own will cause a serious food shortage and much higher prices. Then there’s china. All this will not end well.
The Brookings Institute? Really? They lean so left they’re only inches from the ground. There’s gonna be some serious food price increases and that’s been going on since Obama. Costs of everything is going up, it’s called inflation. Your money buys less because it’s worth les
“Unfortunately inflation is widely misunderstood, which is just the way the pro-big-government Democrats want it. They need to spend far more money than the productive American taxpayers can pay in order to bribe the unproductive lazy for votes. And if they can convince the Fed to print money to “pay for” all this excessive spending up front, the tremendously negative economic impact can be hidden for years.
Inflation is the most nefarious and regressive stealth tax possible. It slowly strangles and starves the poor, who lack the resources to avoid it”
As to the Mexican tariffs?. They’re not going to stem the tide of illegals, said illegals coming here cause their home countries to breath a sigh of relief. The illegals will only stop if camps to house them are tossed up, letting them loose in cities is like turning rats loose in the kitchen. It will take someone with the balls of Orban to really protect the borders. Trump could set up the camps but the optics would be used by the leftists to crucify him and he’s coming up on an election.
Then there is the issue of welfare for illegals, the anchor babies and the diminution of resources. If I knew I could get free medical, free rent, work under the table and not get taxed, cheat with fake ID (Obama’s ruling telling the IRS to not inform people that their SS numbers were stolen still stands) and collect SS while never having paid a dime into the system I’d come here too.
Texas wasn’t flooded, there are other states that produce food. Yes, the flooding was bad, no it’s not the end of the world.
http://www.zealllc.com/2012/biginf3.htm
I’m sorry for people hurt, but Corn being grown in mega quantities in America is one of the worst things that ever happened. Corn planting for ethanol has made too many big farmers into gov’t welfare type farms, so they can sell their ethanol corn. Ethanol which is horrible for car engines, destroys small engines and has a negative EROI. All it has done as allowed corn to be turned into pretend fuel, subsidized to death, and helps destroy the lifespan of pretty much anything with an engine. Additionally Corn helped turn alot of farmers into Mono-Croppers. Corn, then soy, rinse and repeat forever as the soil is toasted. Corn creates a massive amount of unedible biomass, corn itself should be a treat, not a regular food product. Corn syrups became the add on to all our unhealthy foods. High Fructose corn syrup metabolizes differently then sugar and helps destroy your liver. Corn sucks the soil dry quickly, and they grow that stuff on endless fields of dead soil.
GMO’s have dominated corn as well, hybrids etc. Its taught “farmers” to basically just figure out which sprays to use, and pay the mega corps to use their seeds. Meanwhile the aquifers get toasted by run off from the mega farms that produce way too much corn. We shouldn’t have to get most of our actual food we eat from CA/FL or foreign lands. But they made it too damn easy to just plant Soy/Corn with massive machines and sprays, its industrialized farming, with all the down side. Plus they feed that crap to livestock as well, making them unhealthy as hell, giving them simple sugars, needs for antiobiotics go through the roof and the health of the meat turns to shit. Corn has turned alot of what was vibrant farms into mechanized destruction of the soil, propped up with petrochemicals and all the rest. The “cornbelt” doesn’t even produce much food anymore, they produce Corn Sryup and Ethanol.
What other track did you think the Rothschild owned Associated Press would take on this issue?
You ever watch those stories/videos on YouTube where they show thousands of newscasts across the country on every network, all using the exact same language and slant? Those are AP stories fed to the MSM unified conglomerate.
Now what hurts the poor more honestly……….. A few pennies more at Walmart or stagnant wages and unemployment from millions of illegals creating a glut of cheap, unskilled labor?
Red pilled…
Typical drivel….obviously focuses on short term impacts vs. long term systemic (and strategic) impact. think about it for a nanosecond…..Walmart disintermediated all of the main street mom and pop stores that made decent livings for millions of Americans. Now those folks have lost their hardware store, small grocery store, small clothing store, etc. and might be working at Walmart now themselves for minimum wage and scrapping by buying the low-cost shoddy goods made in China at slave labor wage levels and without any environmental externalities! Oddly leftists love bashing corporate America (in America) but say nothing about the environment/climate change when it comes to China.
Now take the Walmart example and apply it to every sector of the US economy and it should be easy to understand that as a society we are better off with a level playing field, the societal costs of Globalization should be paid for by the Globalists…….Walmart made obscene profits and so did Apple by moving their factories to China….but the US taxpayer picked up the tab for unemployment, welfare, increased addiction, crime etc and nobody counts the cost to the environment by less restrictive practices in China.
As to Mexico….similar shit with a different accent….Mexico passes along its social costs to the US taxpayer by exporting the poor and passing through the derelict populations of LatAm…..but the US Chamber of Commerce is ecstatic because they don’t those social costs and the Dems are happy with open borders as it adds to their voter base and gives the disenfranchised people to “help”….awesome!
So logically Trump can unilaterally impose tariffs since after the wall fiasco its obvious nothing will get done in Congress on immigration…..so why not. Better than doing nothing.
NICE!!
The solution is easy…slap a charge on all of the money being send via Western Union etc with a 50% surcharge of the amount being sent. Want to send 100 bucks to that Senorita back home…it’ll cost you 50 bucks.
That’s next, if Yvanka and Jared approve…
Goddammit, I’m really sick of this shit!! What shit? POOR Americans this, POOR Americans that … whaaaa!whaaaa! WHAAAA!!
Every friggin time some new plan is announced …. and that plan doesn’t include Free Shit for the poor ….. many cocksuckers across the internet scream that same tired old song It Be Hurtin’ Dem Po’ People!!
Hey. Tough shit!!! I offer two possible solutions;
—1) Just shut the fuck up already. We don’t give a shit.
—2) Stop being poor!!
And this opinion comes from me … a poor person by many standards.
A poor person can be happy healthy clean dnd comfortable.
So you expected anything other than a shit article from Associated Press?
Why not try CNN or MSNBC to see if they have changed their tune?
The poor crop season will be noticed after awhile. Caused by the Solar minimum. Get ready for price increases.
AP = DS
More bullshit fearmongering. Oh woe is me! My cilantro budget is out of control. /sarc
I do the grocery shopping. I know what shit costs. Organic romaine lettuce at Whole Foods: $1.99. I spend about $12/week there – lettuce, kale, mixed greens, conventional broccoli crowns. Other stuff is mostly from the regular grocery store. Farmers markets will soon be full of products. Prices have barely budged, and prices mostly depend upon the amount of local retail competition, not tariffs on Mexico.
Tariffs are simply taxes, wrapped in the flag for easy consumption by the gullible.
The welfare state is what draws the parasites both from that side of the border AND this side of the border, yet NOT ONE POLITICIAN will stand up and call for its end.
The Brookings Institute!? Get the fuck outta here!