No tariffs yet on Canada, Mexico (and EU for that matter). Still, 10% on $1.55 trn imports (on top of previous tariffs) is a big deal.
Notes: Tax increase associated with announced Trump tariffs on China assuming a unitary price elasticity of import demand (tan bar), and assuming zero (tan bar plus orange bar). Source: graphic from Factcheck (2012), modified by author.
In 2023, the US imported $1547 worth of goods (goods imports are most of what we import from China). Assuming unit elasticity on a 10% tariff, we’d import $1352 trn. The respective tariff revenue is $155 bn or $139 bn — this is the amount of tax revenue irrespective of what happens to the exchange rate or the gate price in China (if you don’t understand this point, it’s the difference between tax incidence and formal revenues).
Combined 2018-2019 Section 232 and Section 301 tariffs amounted to $80 billion [Tax Foundation], so the taxes on imported goods coming from China still amount to the biggest one year tax increase.
Trump has stated that the EU is now in the crosshairs. Here is 2023 import value from the EU:
Source: ITA.
Not only is the amount larger than for either Canada or Mexico (for just goods), it’s of a different character, much more characterized by intra-industry trade. You can guess the demand elasticity is probably lower.
Source link
