President Trump tweeted Sunday morning that his burgeoning trade wars with China and other countries will have a very specific benefit to the U.S.: bringing down the national debt.
“Tariffs are working big time,” Trump tweeted, adding, “Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!”
The Facts: Trump’s claim is “bizarre,” says The Washington Post’s Heather Long.
First, the president portrays tariffs as taxes on foreign companies, but the truth is that many U.S. companies, and ultimately consumers, bear the cost.
Second, with his tax cuts and spending increases, Trump will add about $1.6 trillion to the national debt over the next 10 years ($1.9 trillion if you factor in interest on the additional debt), according to the Congressional Budget Office. The debt now totals more than $21 trillion. “The president has imposed tariffs on $85 billion worth of foreign goods so far,” Long writes, “meaning that, at most, his tariffs would raise about $21 billion, a minuscule percentage (0.1 percent) of the debt.”
On top of that, the Trump administration has announced a $12 billion aid package for farmers hurt by the tariffs. That will reduce the net total raised by the tariffs. “If other industries successfully lobby for similar bailouts—and already that talk is beginning—the price tag would be $39 billion, according to an analysis that the U.S. Chamber of Commerce published last week,” Reason’s Eric Boehm notes. “As a revenue question, that would put the tariffs in the red even before you take into consideration how they could reduce future growth.”
At the conservative blog Hot Air, Taylor Millard put a positive spin on Trump’s tweet: “It is nice to see Trump throw away his farcical claim the tariffs are being done to protect national security – even if the current reasoning is as harebrained as the previous one.”
The bottom line: Trump’s tariffs won’t raise enough money to make a substantial dent in annual deficits set to climb above $1 trillion, let alone the $21 trillion national debt. CNBC’s John Harwood, appearing on MSNBC Monday morning, put it succinctly: “This is an economic gibberish argument the president is making.”