As we’ve been saying ever since this issue heated up, tariffs hurt the economy. There’s no way around it. Seeing this harm, President Trump today proposed $12 billion in emergency aid to farmers hurt by his trade policies.
Consumers are already seeing higher prices, fewer choices, slower innovation, and less competition to choose from.
This is a bad idea. This round of aid tries to fix one mistake with another mistake. That $12 billion of aid comes from other people, reducing their purchasing power and hurting other industries. Aid recipients will only benefit at others’ expense, meaning the best possible economic impact is zero. Add in Washington’s cut for administering the transfer, plus efficiency losses from lost consumer choice, and President Trump essentially announced that he has decided to counteract the economic harm he has already caused with further economic harm. A better policy would be to fix his mistakes. That would mean rescinding all of the tariffs so far enacted, and refraining from enacting new ones.
Because of Trump’s tariffs and the predictable international response, consumers are already seeing higher prices, fewer choices, slower innovation, and less competition to choose from. The Tax Foundation has estimated that the losses from Trump’s trade policies have already negated any benefits from last year’s tax cut. Tariffs also hurt producers. Steel tariffs mean more expensive cars. Aluminum tariffs mean more expensive soda and beer. International retaliatory tariffs roughly double the damage the president is already causing to the U.S. economy—which, according to the Tax Foundation, could reduce GDP by more than $100 billion.
Rather than try something else that does work toward those goals, such as unilateral free trade, it is doubling down on its mistakes.
Farm tariffs, the target of today’s aid announcement, are causing chaos in futures markets for soy, wheat, and other products. Farmers of those products, as well as pork, lobster, and dairy, are seeing similar harm.
All of these harms were avoidable. The administration’s trade policy is an enormous unforced error which will take years to undo.
It is well past time for Congress to reclaim its taxing authority under Article I, section 8 of the U.S. Constitution. It is clear that the executive branch is not going to responsibly use the taxing power Congress has delegated to it and is unwilling to admit that its tariffs are not achieving its goal of fair and reciprocal trade. Rather than try something else that does work toward those goals, such as unilateral free trade, it is doubling down on its mistakes. It is not too late to reconsider.