In nominal dollar terms. Thanks, Trump.
Notes: Tax increase associated with announced Trump tariffs on Canada, Mexico, and China assuming a unitary price elasticity of import demand (orange bar), and assuming zero (orange bar plus light orange bar). Source: graphic from Factcheck (2012), modified by author.
Over the weekend, US taxes roughly $2.4 trn worth of goods (2023 amounts). That’s the biggest one year tax increase in dollar terms since… ever, at $364 bn (if Trump goes through with plans). Taxes collected by CPB, and going into the US Treasury. Automatic escalation clauses if the target countries retaliate (which Canada already has declared).
That’s in nominal dollar terms. As a share of GDP, it’s 1.2%, 1% assuming unit elasticity.
I note that with the 30 day deferral for Mexico, it’s still a $245 bn increase in taxes in effect as of Tuesday.
Mexico’s deferral is evidence that the threat of tariffs amount to elephant repellent.*
Mexico has agreed to do some things which are the very same things Mexico has agreed to in the past, without being threatened with tariffs. All we had to do was ask. “See?”, says the rapist-in-chief, “Tariffs work.”
Colombia refused to accept deportation flights with deportees in shackles, but had routinely allowed deportation flights sans shackles. Once the shackles were gone, Colombia agreed to the resumption of deportation flights. “See? Tariffs work.”
Elephant repellent. Trump almost certainly didn’t know that roughly 40% of produce sold in the U.S. is imported, that 90% of avacados, 40% of strawberries and about 2/3 of vegetable imports come from Mexico. So who blinked? Who backed down? He did, but he’ll claim tariffs worked. “I’d have kicked his ass, but he’s not worth it” said every spineless bully ever.
*”Why are you banging on that drum?”
“To keep the elephants away”
“This is Tennessee; there aren’t any elephants here”**
“See, it works.”
** In fact, there is an elephant refuge in Tennessee.