Trump tariffs would help pay for his tax cuts, JD Vance says
FORMER President Donald Trump’s agenda of higher tariffs on US imports would help offset his expanding tax-cut proposals if he’s re-elected in November, according to his running mate, Ohio Senator JD Vance.
“If we actually balance this out by penalising some of these companies for manufacturing overseas I do think that we can get this to balance out in the right way, where we are not blowing a hole in the deficit, we are giving workers more of their money,” Vance said on Sunday (Sep 15) on CBS’s Face the Nation.
Trump has rolled out a series of tax plans, seeking to appeal to various voter groups. He has proposed ending all taxes on tipped income and overtime work and on Social Security retirement benefits, raising questions among economists and political opponents about the impact on the US budget deficit.
Trump floated the idea of tariff hikes to offset some income tax cuts to House Republicans in June.
Asked on Sunday whether fiscally conservative Republicans in Congress would go along, Vance said that “obviously Republicans believe American workers should keep more of their own money”.
Trump has pledged to enact a 10 per cent across-the-board tariff on imports, potentially targeting trading partners such as the European Union, and to increase duties on Chinese-made goods to 60 per cent or more, saying that would generate trillions for the US.
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Most economists argue that Americans would ultimately pay higher costs and face reignited inflation.
Vice-President Kamala Harris, the Democratic nominee, portrayed Trump’s tariff plans as a 20 per cent “Trump sales tax” on everyday goods during their presidential debate on Sep 10, a description the former president rejected.
Economists say both candidates’ tax and spending pledges would push up the federal budget deficit. Trump’s plans would increase the deficit by a net US$4.1 trillion over the next 10 years, while Harris’ would raise it by a net US$2 trillion, according to estimates by the University of Pennsylvania’s Penn Wharton budget model.
Other tax and budget specialists estimate that Trump’s tax plans would cost as much as US$10.5 trillion over a decade.
Congressional appetite
Gary Cohn, who ran the White House’s National Economic Council under Trump, said he does not see “a lot of appetite” in Congress for ballooning the deficit.
“I do think there is growing opposition in both the House and the Senate and, I would say, both sides of the aisle for a large deficit tax plan,” Cohn, now vice chairman at International Business Machines and a former president and chief operating officer of Goldman Sachs Group, said.
Trump, the self-declared “tariff man”, has described threats of higher duties as part of negotiating tactics to win concessions.
“I can’t believe how many people are negative on tariffs that are actually smart,” Trump said in June. “Man, is it good for negotiation.”
Vance echoed that approach on Sunday.
“Sometimes you are going to have to do higher tariffs, sometimes you might be able to do lower tariffs,” he said. “You use that as part of the negotiation.” BLOOMBERG
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