TL;DR
A Trump advisor claimed tariffs would generate $6 trillion, but this ignores basic economics. These tariffs are essentially a tax hike on Americans, echoing historical blunders like the 2008 housing crisis and protectionist policies of the Great Depression.
Story
Trump’s trade advisor, Peter Navarro, claimed new tariffs would magically generate $6 trillion over a decade. This sounds like a free lunch, but it’s more like a hidden tax hike.‣ Tariff: A tax on imported goods.
Navarro’s math is fuzzy. He says tariffs on auto imports would raise $100 billion yearly, and other unspecified tariffs would rake in another $600 billion. This $600 billion figure is supposedly from a flat 20% tariff on all imports.‣ Flat tariff: A fixed percentage tax on all imports, regardless of type or origin.
Here’s the catch: Americans pay these tariffs. Prices rise, and consumers buy less. It’s like raising taxes while claiming it’s “free money.” This echoes the false promises of past bubbles, like the 2008 housing crisis built on bad loans.‣ 2008 Housing Crisis: A market crash triggered by risky lending and inflated housing prices.
While Trump touted tariffs as “tax cuts” that create jobs and boost national security, economists across the board slammed the idea. A flat tariff hits everything indiscriminately—even goods America doesn’t produce. This disrupts supply chains and hurts consumers, just like protectionist policies that deepened the Great Depression.‣ Great Depression: A severe worldwide economic downturn in the 1930s, exacerbated by protectionist trade policies.
Even Trump’s economic advisor, Kevin Hassett (known for his wildly optimistic “Dow 36,000” prediction), admitted he had no idea what Trump would do. This uncertainty fuels market fear and increases recession risk. Just like the Enron scandal, where opaque accounting hid massive fraud, this lack of transparency is a red flag.‣ Enron Scandal: A major accounting scandal involving energy company Enron that led to its bankruptcy.
This situation is a cocktail of naive optimism and risky policy, reminiscent of past financial disasters. History shows us that magical thinking in economics usually ends badly.
Advice
Don’t believe politicians who promise “free money” through tariffs. These hidden taxes ultimately hurt consumers and risk economic instability.
Source
https://www.reddit.com/r/stocks/comments/1jnlbkn/trump_aide_says_tariffs_will_raise_6_trillion_as/