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In a heated White House press briefing on March 11, Press Secretary Karoline Leavitt claimed that tariffs imposed by the Trump administration were “a tax cut for the American people.” The statement met with immediate skepticism, contradicts decades of economic research, which overwhelmingly classifies tariffs as a form of taxation that burdens consumers through higher prices.
When pressed by Associated Press reporter Josh Boak about the validity of her claim, Leavitt dismissed his questioning as “insulting.”
“I’m sorry, have you ever paid a tariff?” Boak asked. “Because I have. They don’t get charged on foreign companies. They get charged on the importers.”
Leavitt pushed back, insisting, “Ultimately, when we have fair and balanced trade, which the American people have not seen in decades, revenues will stay here, wages will go up, and our country will be made wealthy again.”
Economic Reality: Tariffs as Tax Hikes
Historical data and economic studies have consistently demonstrated that tariffs are passed down to consumers, raising costs on imported goods. Following President Donald Trump’s announcement of new tariffs targeting Canada, Mexico, China, and other nations, the stock market reacted negatively, with the S&P 500 dropping more than 9% over three weeks.
Research from Trump’s first term shows that tariffs raised consumer prices without delivering the promised economic benefits. If anything, the proposed second-term tariffs are more aggressive, likely exacerbating inflationary pressures and hurting economic growth.
Expert Consensus: Leavitt’s Statement Is ‘Nonsensical’
Economists from across the political spectrum criticized Leavitt’s assertion:
- Daniel Mitchell, Independent Libertarian Economist: “The statement that tariffs are a tax cut is nonsensical.”
- Steve Fazzari, Economist, Washington University: “Tariffs are taxes. Higher tariffs mean higher taxes. I cannot see any direct way in which a higher tariff constitutes a tax cut.”
- Ross Burkhart, Political Scientist, Boise State University: “Importers pay tariffs, and they pass those costs down to consumers. This is a basic economic fact.”
- Tara Sinclair, Economist, George Washington University: “Economists don’t agree on much, but we agree that tariffs are taxes on consumers.”
Surveys conducted by the American Economic Association in 1990, 2000, 2011, and 2021 found that 94%-95% of economists agreed tariffs reduce overall economic welfare. Despite this overwhelming consensus, the White House has not provided a direct economic justification for Leavitt’s statement.
The Theoretical Argument: Tariffs Enabling Tax Cuts?
The only potential rationale for Leavitt’s claim is the notion that tariff revenues could enable future tax reductions elsewhere. However, leading economists reject this as unrealistic. Dartmouth economist Douglas Irwin notes that even a 100% tariff on all imports wouldn’t generate enough revenue to replace federal income taxes. Furthermore, tariffs disproportionately impact lower-income Americans, making the tax burden more regressive.
Tariffs as a Negotiating Tool?
Some White House officials, including Commerce Secretary Howard Lutnick, argue that tariffs serve as leverage in trade negotiations. If they successfully force foreign governments into better trade deals, they could theoretically lead to economic benefits that support future tax cuts. However, economists warn that such strategies carry significant risks and could harm U.S. industries dependent on international trade.
“When you’re negotiating with someone and they’re not paying attention and they’re disagreeing, the president, who’s the best dealmaker ever to sit in that chair, he’s going to say, ‘Here’s my response,’” Lutnick told CBS News. “And then all of a sudden, shockingly, they respond.”
Our Verdict: False
Leavitt’s claim that “tariffs are a tax cut for the American people” is widely contradicted by economic evidence. Experts overwhelmingly agree that tariffs act as a tax hike on consumers rather than a financial relief mechanism. While the revenue generated from tariffs could, in theory, offset taxes elsewhere, the economic cost of such measures is far greater than any potential benefits. We rate this statement False.
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