Presidential Candidate Platforms Explained: Trump Tariffs

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3:16You watched the debate last week, right? Well, if you did, you saw the topic the moderators kicked off was the economy. The issue, they said, was ranked number one for voters. I mean, we could have called that, right? Inflation is coming down, which is great news, but there are still recession fears swirling. So we, the people, want to make sure the next president of the United States can steer this economy in a good direction. As the election heats up and it's already getting pretty hot, I'm going to be breaking down some of the key economic issues and the different platforms formulated by the nominees.

3:47Today and tomorrow, I'm going to unpack a buzzy proposal from each candidate. And you know that I do not shy away from sharing my own views. But for these episodes, I am going to stay nonpartisan. I'm going to cut through the political sideshow so that you can have just the facts on how you and your wallet would be affected by either candidate. I'm going to start with Trump. Today, I'm going to be talking about a major component of his economic platform that he highlighted in the debate. Tariffs. Tomorrow, I'm going to talk about Kamala Harris's controversial price gouging ban. But first, let's start with the Trump tariffs.

4:20In the campaign for his second term, Trump has proposed new tariffs on Chinese imports, which he said will be set anywhere from 10 % to 60%. When we think about how we might be affected by this policy, we actually have the benefit of hindsight here because Trump imposed a lot of tariffs during his first term. So let's take a look at what he did and how those tariffs affected the economy and individual Americans. The big picture you need to know is that a tariff is a tax that a government places on imports or exports. So when a country imposes tariffs, it increases the cost of goods coming into the country.

4:56Typically, the importer will normally pay the tariffs. So let me just make up an example here. If there's a 25 % tariff on steel from Canada, when a U.S.-based company imports steel from Canada, that American company will have to pay the tariff. The idea is that if you make foreign products more expensive, domestic products will be used instead. And then hopefully domestic jobs and industries will be protected by making foreign competitors less attractive in terms of price. So even though it's the company that's taxed, most companies don't just eat that cost themselves. Instead, they pass it on to us, the consumers, in the form of higher prices.

5:34So in the example I just made up about steel imports, if there's a 25 % tariff on steel from Canada, companies will likely raise the price of products that they make with that steel, like cars or appliances, to cover that extra expense. That means American consumers, you and me, end up paying more for the goods we buy. The tariff cost is essentially passed all the way down the supply chain, and that's why tariffs can affect the overall economy by making everything from raw materials to finish products more expensive. Sometimes companies also absorb part of that tariff cost to stay competitive.

6:09But over time, higher tariffs often lead to higher prices at checkout. OK, now let's talk about Trump. When he was president, one of his key economic strategies was to impose tariffs, particularly on China. He argued that the U.S. was getting a raw deal in trade with other countries, particularly China, and that foreign competition was harming American businesses. His goal was to bring back jobs to industries like steel and aluminum and to reduce the U.S. trade deficit. By the way, a trade deficit is when a country imports more than it exports. During his presidency, Trump imposed over 80 billion dollars worth of tariffs.

6:46While China was his key target, he also zeroed in on steel and aluminum. And those tariffs were practically global. In March of 2018, Trump slapped a 25 % tariff on steel and a 10 % tariff on aluminum imports from almost every country in the world, including very close allies like Canada, Mexico, and the European Union. So why is Trump so obsessed with steel? Well, he wanted to protect the American steel and aluminum industries from cheaper imports, which are making it harder for U.S. companies to compete. He even brought up national security as part of his justification, saying that having strong domestic steel and aluminum production was crucial to a country's defense.

7:27But more broadly, steel is just a big deal in the U.S. America was built literally and metaphorically on steel, so it symbolizes American industry. Plus, steel has a powerful union behind it. And steel is a big industry in Pennsylvania specifically, which is famously a crucial swing state. But the steel tariffs led to a lot of friction with U.S. allies. And in some cases, those countries hit back with their own retaliatory tariffs on American goods. For instance, Canada placed tariffs on U.S. exports like ketchup, coffee and dairy products, which was devastating news for any of those breakfast is the most important meal of the day, people.

8:07But back to China. The result of Trump's tariff strategy was what became known as the U.S.-China trade war. Trump hit China with tariffs on over $360 billion worth of goods. These tariffs came in several waves starting in 2018 and then again were designed to punish China for what Trump claimed were unfair trade practices, specifically intellectual property theft and forcing U.S. companies to share their tech when they did business in China. Here's how it worked. The U.S. imposed tariffs starting at 10 % and going up to 25 % on a wide range of Chinese imports on technology like smartphones and electronics, machinery and industrial goods, and consumer goods like furniture and clothing.

8:50Generally, the big risk of imposing tariffs is retaliation. And that's exactly what China did. China slapped tariffs on$110 billion worth of American products, including very specifically cars, pork, whiskey, and soybeans, which hit U.S. farmers particularly hard. But who was the big winner of this trade war anyway? Did Trump's tariffs actually work? Well, first of all, it's worth noting that Biden did keep a lot of Trump's tariffs in place, but Biden was also dealing with a very different economy post-COVID than Trump was. Anyway, most economists argue that Trump's tariffs had a mixed, if not negative, effect on the U.S.

9:30economy. Let's recap the three major goals of these tariffs, which again, were number one, protection for domestic companies and consumers, number two, safeguarding domestic jobs, and number three, a lower trade deficit. Let's start with American businesses and consumers. The tariffs increased costs for businesses that rely on imported materials. So a lot of U.S. manufacturers depend on foreign steel and aluminum. And the tariffs meant that they had to pay higher prices for those materials. Those higher costs were then often passed on to the consumers. And remember when I mentioned how hard farmers were hit because of the soybean tariffs?

10:06Who knew that soybeans played such an important role in our economy? But they do. In fact, the U.S. government had to bail out farmers to the tune of$28 billion in 2018 and 2019 to help offset their losses. In the face of higher costs for businesses, consumers definitely felt the squeeze. The tariffs caused price bumps in things like electronics, cars, and even everyday goods like clothing went up. Studies show that American households ended up paying about$1 ,300 more as a result of tariffs, which definitely did not help inflation. Now let's talk about jobs. One of Trump's key promises was to protect American jobs, especially in manufacturing.

10:48But did that happen? In the steel industry, there was a slight increase in jobs at first, but it wasn't nearly enough to offset the jobs lost in other industries affected by higher materials costs. In the steel industry, there was a slight increase in jobs at first, but it wasn't nearly enough to offset the jobs lost in other industries affected by higher materials costs. Studies estimate that the tariffs caused a net loss of jobs because while the tariffs did help a small number of industries, they hurt many others. One specific study from the Peterson Institute for International Economics found that for every job saved in steel production, about 16 jobs were lost in industries that use steel.

11:34And as for the U.S. trade deficit, the U.S. trade deficit with China actually hit record highs during the tariff wars. Why did this happen? Well, it was twofold. First, tariffs didn't reduce demand. Americans still bought Chinese goods despite higher prices because there weren't always cheaper alternatives. And second, the retaliation. China and other countries retaliated with tariffs on American goods, which hurt U.S. exports and actually widened the trade deficit. So did Trump's tariffs achieve their goals? Not exactly. While they were meant to protect American industries and reduce the trade deficit, they ended up raising costs for businesses and consumers, hurt American farmers, and didn't significantly bring back jobs in the industries they were supposed to protect.

12:22That said, the tariffs did force a conversation about trade imbalances, especially with China. And while the U.S.-China trade war didn't solve all the problems Trump wanted it to, it did lead to new trade negotiations, including the phase one trade deal signed in 2020, where China agreed to buy more American products. But even that didn't fully offset the damage from the tariffs. And looking ahead to November and beyond, economists are predicting that the cost-benefit analysis of the tariffs Trump is now proposing would have a similar over-indexing in cost. Moody's chief economist told CNN that the proposed tariffs would likely push America into a recession and would result in roughly 675 ,000 jobs lost.

13:09For today's tip, you can take straight to the bank. Make sure your loved ones are registered to vote. I know we get this message beat into our heads at least every four years. But remember, anyone under the age of 21 probably hasn't voted in a presidential election yet. So if you fall into that age group or if you have kids or loved ones who do, give them a gentle reminder to register to vote and send them the link in my bio. I mean, hello, if future Madam President Taylor Swift is telling us to do so, why wouldn't we? Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.

13:45Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.

14:23Thank you.