President Donald Trump boasted on Thursday of a new trade agreement that, on average, triples the taxes Americans will have to pay on British imports while signalling that higher tariffs will be the norm for agreements with other countries as well.
According to a chart used by Trump, the new trade deal with the United Kingdom will bring in $6 billion in “external revenue,” a term he and his administration dishonestly use to describe payments collected by U.S. Customs from American importers.
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The new 10% rate for nearly all goods, which was announced last month for countries all over the world, is three times higher than the 3.4% average rate Americans have paid for goods from Britain and Northern Ireland.
“It’s an anti-trade deal,” said Scott Lincicome, the director of economics at the Cato Institute’s Centre for Trade Policy Studies.
He and other economists said that Trump’s description of that 10% rate as the minimum tax level for all coming trade agreements effectively makes the United States a high-tariff country and will be a continuing drag on the economy.
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“That is largely in line with my fears,” said Jason Furman, a top economist in the Obama White House and now a professor at Harvard University. “Best case is emerge from Trump with a 12% average tariff rate on world. That is back to the 1940s and on par with Iran and Venezuela.”
Bonnie Cash/UPI/Bloomberg via Getty Images
University of Michigan economist Justin Wolfers said, “A 10% across-the-board tariff is ridiculously high, and about five or ten times higher than any of our trading partners.”
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Trump said he agreed to lower his 25% tax on imported cars to 10% for the first 100,000 cars entering from the U.K. each year to help the British auto industry because it mainly produces high-end luxury cars. “They make a very small number of cars that are super luxury, and that includes Bentley and Jaguar,” he said.
In return, the UK has agreed to open its market to American beef and other agricultural products, Trump said. “We’re a very big country. We have a lot of beef. We’re a very big country,” he added.
Trump also continued pushing his repeated lies about how international trade works, claiming, again, that the United States “loses” money when Americans buy foreign goods and that other countries pay US tariffs.
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“That means we lose less money,” he said when asked during an Oval Office photo opportunity about shipping traffic falling off at US ports and dock workers and truckers fearing for their jobs. “Look, China was making over a trillion ― 1.1 trillion, in my opinion. You know, different numbers from 500 billion to 1 trillion or 1.1 trillion. And frankly, if we didn’t do business, we would have been better off.”
He then repeated a favourite falsehood of his over the years about the tariffs he imposed on Chinese imports during his first term: “China paid hundreds of billions of dollars in tariffs, when I was president.”
In reality, foreign nations pay none of those tariffs. American importers do, predominantly manufacturers buying raw materials and retailers. Both pass along the import taxes in the form of higher prices paid by consumers.
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If all the tariff rates announced by Trump on his so-called “Liberation Day” on April 2 go into effect, it will cost American importers and consumers an extra $2.4 trillion in new taxes over a decade.
