Unraveling the complex world of tariffs and their impact on everyday Americans. Get ready for a clear breakdown of this hot economic topic!
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00:00We will not rest until we have delivered the strong, safe and prosperous America that our children deserve and that you deserve.
00:07Welcome to WatchMojo, and today we're breaking down the unprecedented tariffs proposed by President-elect Trump and what that means for your wallet.
00:15If the U.S. puts 60 percent tariffs on goods from China, who pays for that ultimately?
00:21Other countries are going to finally, after 75 years, pay us back for all that we've done for the world.
00:27In the months and weeks leading up to the 2024 U.S. presidential election, Republican ex-president Donald Trump increasingly campaigned on two key issues,
00:36immigration and, crucially for our video today, the economy.
00:40President-elect Trump has proposed sweeping tariffs that have the potential to significantly affect the average consumer.
00:46I've made a lot of money. I was very successful.
00:48And I think I have a better instinct than in many cases people that would be on the Federal Reserve or the chairman.
00:54But what does that mean?
00:55Trump has put a lot of tariff proposals out there.
00:58He loves tariffs.
00:59And I think we need to be ready to see across the board tariffs, maybe with some exceptions, against all trading partners, as well as up to 60 percent tariffs against Chinese imports.
01:12According to nonpartisan think tank the Tax Foundation, tariffs are, quote,
01:17taxes imposed by one country on goods imported from another country, and are, quote,
01:31Maybe he starts with 30 and he says, if we're within three months, if we don't have a deal or we don't see a change in our trade deficit with China, then we go to 60.
01:41Trump's vision for tariffs, as described by the BBC's Ben Chiu, is to, quote,
01:49solidly in line with his America First platform.
01:53As Chiu succinctly defines it, a tariff, quote,
02:00In other words, quote,
02:01The charge is physically paid by the domestic company that imports the goods, not the foreign company that exports them.
02:07For context, President Biden decided to largely leave tariffs unchanged from the president-elect's first term.
02:13And based on her statements on the campaign trail, it seems likely that Vice President Kamala Harris would have, for the most part, pressed forward in this direction had her 2024 presidential bid been a success.
02:23Politicized central bank is generally associated with higher rates of inflation.
02:29And it ends up hurting the U.S. and it actually ends up benefiting the rest of the world because you essentially get capital outflow from the United States.
02:37So with that in mind, how would Trump's new tariff plan differ?
02:52As you probably could have guessed by now, if 47 gets his way, it'll differ significantly.
02:58The Peterson Institute for International Economics, another nonpartisan think tank, issued a September 2024 report detailing Trump's proposed economic policies and their possible impacts.
03:08If the U.S. puts 60 percent tariffs on goods from China, who pays for that ultimately?
03:14The consumer is ultimately going to pay for that increased price.
03:18You're going to see the prices at stores across the board go up.
03:21Specifically, Trump's plan to, quote, increase tariffs on all U.S. imports by 10 percentage points and boost tariffs on U.S. imports from China by 60 percentage points, with or without other countries retaliating by imposing higher tariffs on their imports from the United States.
03:37According to the Peterson Institute, this radical tariff plan could seriously damage the U.S.
03:42GDP, employment and most of all, the economy.
03:45Initially, that retailer or the product manufacturer will pay that price.
03:50If they don't pass it along to the consumer, they're making less in profit.
03:54President-elect Trump has repeatedly claimed that his tariffs will usher in a new era of American prosperity, protect workers and their jobs and revitalize the sagging economy.
04:04The more likely it is that the company will come into the United States and build a factory in the United States so it doesn't have to pay the tariff.
04:11In a speech given at the end of September 2024, Trump claimed that under his second presidency, quote, American workers will no longer be worried about losing their jobs to foreign nations.
04:22Instead, foreign nations will be worried about losing their jobs to America.
04:26Ironically, this would not promote a revitalization of the industrial sector.
04:31Those sorts of things will raise the prices of all kinds of industrial inputs.
04:38And so that will make it harder to produce industrial products in the United States.
04:43However, research conducted during Trump's first term, quote, found no substantial positive effects on overall employment in U.S.
04:50industrial sectors that were protected, according to the BBC.
04:54Said Mary Lovely, a senior fellow at the aforementioned Peterson Institute, quote, if higher taxes are placed on these imports from China, their production will move to other, less developed countries.
05:04The impact on different levels of household income is pretty dramatic.
05:09And, you know, these kinds of taxes, tariff taxes, are extraordinarily regressive and hurt lowest income families the most.
05:17Perhaps even more worryingly, a report published by the National Retail Federation indicates the possible consequences of Trump's tariffs on the consumer.
05:25And they're definitely cause for concern.
05:27The issue is, can we trade enough and have good relations with other countries and build more in America so as not to be as dependent on China?
05:37As reported by CNBC's Annie Nova and Rebecca Picciotto, quote, the cost of clothing could rise between 12.5 and 20.6 percent,
05:46which, for example, would raise the price of men's jeans from $80 to as high as nearly $100.
05:52The same report found that price spikes would be most pronounced on toys, somewhere between 36.3 percent and 55.8 percent.
06:00That's the modern and the long-term history of tariffs, is that they nick growth, they raise inflation and they raise consumer prices as part of that inflation channel.
06:14Economist Mark Zandi has warned that the resultant, quote, massive tax increase on American families as they pay more for all imports
06:21will cut into their purchasing power and thus weigh heavily on their spending and the overall economy.
06:26But remember, a lot of what we sent overseas, we didn't really feel we wanted America to make anymore.
06:31You know, think steel, think chemicals, the pollution, the toxicity went with that.
06:36Trump has been quoted as saying that, quote, to me, the most beautiful word in the dictionary is tariff.
06:42Biden took a more targeted tariff approach. He raised selective tariffs against China.
06:48So let's see if some Trump advisers can convince the incoming president that across the board tariff is not in your interest.
06:56However, according to conservative issue advocacy group the American Action Forum,
07:01the negative effects of his proposed tariffs could be wide ranging and lead to retaliation from U.S. trade partners.
07:07AAF data analyst Jacob Jensen broke this down, saying, quote,
07:11if all countries were to respond with a 10 percent tariff on goods imported from the United States,
07:16retaliatory tariff values could reach 200 billion dollars.
07:20This would have an immediate and potentially devastating effect on the U.S. economy
07:24and would inflate the costs passed down to the average American.
07:27Jensen further reported that these retaliatory tariffs from countries such as Canada,
07:32Mexico and Germany could cause the average household income to drop by up to 6 percent.
07:37I think when he proposed eliminating the income tax and just having tariffs,
07:41there was sort of like an oh my gosh moment for everyone.
07:44You've seen this with Trump before, right? He throws out this really bold idea,
07:49but then by the time it actually starts getting implemented, by the time he's talked with more people about it,
07:53you see it kind of transform.
07:55Perhaps the buzziest question on everyone's mind is how Trump's proposed economic policies
08:00will affect the United States' already tense relationship with China.
08:03Could fears of a slowly escalating trade war come to pass?
08:07Lester, there's a real divide among economists and executives about this.
08:10Like take Steve Madden, for example, the CEO on the earnings call this week.
08:13He said he's been building up production in Vietnam, Cambodia, Brazil, Mexico as an alternative to China.
08:20The U.S. is not on his list.
08:21The president-elect has promised to impose massive tariffs of up to 60 percent on all Chinese imported goods,
08:27which is cause for deep concern in Beijing amidst a weakened Chinese economy.
08:32A lot of the growth in China in recent years has been from the sale of properties
08:36and local governments have sold land around the cities and in the countryside to property developers.
08:42Since the collapse of the property market, that funding isn't available and they've run up debt
08:47and they're paying a lot of interest on that debt.
08:49As the American Action Forum's Jacob Jensen reported,
08:52the 60 percent tariff floated by the 45th and 47th president,
08:56quote, would drive new U.S. tariffs from an estimated $300 billion to $522 billion,
09:02and that placing this tariff on bilateral trade, quote,
09:05would likely drive the global economy into a depression.
09:08While Jensen is quick to point out that this situation is unlikely to occur
09:12given the two countries' reliance on one another,
09:15it's clear that economists are right to worry about what the president-elect's campaign pledges could lead to.
09:20He's basically, he's already indicated that he's going to be looking at pretty much doing what he did before.
09:28He said that people are talking about free trade.
09:31He said, but there hasn't been free trade for decades.
09:33He said that China has been able to take advantage of various subsidies,
09:37various low production costs and all these kind of things,
09:40pretty much at the expense of American workers.
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09:58The argument can be made that Trump has noble intentions behind implementing sky-high tariffs.
10:03He aims to protect the livelihoods of American workers
10:06while increasing his country's competitiveness on the global stage.
10:10America has given us an unprecedented and powerful mandate.
10:16However, experts' concerns are far from unfounded.
10:20They suggest that this move could alienate the U.S. from its allies,
10:23provoke retaliatory measures against it, and worst of all, hurt the average American.
10:28Amidst heightened uncertainty ahead of Trump's second presidency,
10:31one thing is for sure, Trump is a politician unlike any other.
10:35I want to thank the American people for the extraordinary honor of being elected your 47th president and your 45th president.
10:45What do you think of President-elect Trump's proposed tariffs?
10:48Let us know in the comments below.
10:50Did you enjoy this video?
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