If actually implemented, all tariffs announced by the United States so far, added to the defined retaliation -and those frozen by negotiations -the negative impact on US long -term GDP can reach 1%. The account was made by Tax Foundation, a think tank Research on Washington -based tax policies.
Without counting any foreign retaliation, the drop in economic activity is estimated at 0.8%.
In a conventional base, before incorporating the negative effects of tariffs in the US economy, it is estimated that all tariffs will increase US federal tax revenue by $ 2.2 trillion in the next decade. Already on a dynamic basis, calculating the negative effects of tariffs, the collection would fall to $ 1.5 trillion.
By incorporating the negative effects of partner retaliatory tariffs further reduces 10 -year revenue by $ 132 billion.
Tax Foundation points out that economists often agree that free trade increases the level of production and economic income. Conversely, commercial barriers reduce economic production and income. Historical evidence shows that tariffs increase prices and reduce available amounts of goods and services to US companies and consumers, resulting in lower income, job reduction and lower economic production.
The study highlights how tariffs can reduce US production. One possibility is that a fare can be passed on to producers and consumers in the highest price. “Tariffs can increase the cost of parts and materials, which would increase the price of goods that use these inputs and reduce production of the private sector. This would result in lower rents for both capital owners and workers,” the text says.
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Similarly, higher consumer prices due to tariffs would reduce the value after tax and capital income taxes. As the highest prices would reduce their return to work and capital, they would encourage Americans to work and invest less, leading to lower production.
Alternatively, the US dollar can value itself in response to tariffs, offering the potential price increase for US consumers. The most valuable dollar, however, would make exporters more difficult to sell their products in the global market, resulting in lower revenues for exporters.
“This would also result in lower production and income from the US to workers and capital owners, reducing work and investment incentives and leading to a lower economy.”
