A few members of the Administration, including Trump himself, have suggested that the proposed new tariffs could bring in an additional $600 billion in new revenue per year. That's an astonishing claim.

U.S. imports of goods constituted about $3 trillion per year under current trade policy. For a new tariff scheme to yield an increase of $600 billion in revenue, that would have to be an effective 20% tariff on every good from every country, on average. Some might be higher or lower, but the overall rate of the new tariff would have to work out to 20% across all imports.

Of course, even that wouldn't yield $600 billion - because people respond to incentives. New tariffs of that magnitude would drive imports down, reducing the amount of revenue. So if the Administration is genuinely thinking that they can yield $600 billion in revenue, the overall effective rate has to be even higher than 20%.

I guess we'll find out in a few days where the rates are going to be set, but their revenue figures suggest that they're going to set them really high. Going to be quite a shock to the system....

US Policy FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.