News & Politics

Paul Krugman Details Trump's Underhanded Trade Policy that Raises Taxes on Consumers While Letting Corruption Flourish

"Somehow, I don’t think that’s making America great again."

Photo Credit: CNN

President Donald Trump is ramping up his worldwide trade war, but with all the other news flooding the airwaves, most Americans probably haven't heard much about it.

That's a big problem, economist Paul Krugman argued Thursday in a column for the New York Times, because Trump's trade policy deserves far more scrutiny.

"Trump’s tariffs really are a big, bad deal," he wrote. "Their direct economic impact will be modest, although hardly trivial. But the numbers aren’t the whole story. Trumpian trade policy has, almost casually, torn up rules America itself created more than 80 years ago — rules intended to ensure that tariffs reflected national priorities, not the power of special interests."

Krugman makes clear that Trump's tariffs, despite the White House spin, are taxes on Americans.

So while Republicans run around claiming they've given the country massive tax cuts — most of which went to corporations and the wealthiest among us — they're leaving out the fact that the president has unilaterally levied huge new taxes on American consumers.

"Although Trump and his officials keep claiming that this is a tax on foreigners, it’s actually a tax hike on America. And since most of the tariffs are on raw materials and other inputs into business, the policy will probably have a chilling effect on investment and innovation," said Krugman.

And even as the White House raises taxes on average Americans, the very same policy opens up the potential for widespread corruption:

As I said, most of the tariffs are on inputs into business — and some businesses are getting special treatment. Thus, there are now substantial tariffs on imported steel, but some steel users — including the U.S. subsidiary of a sanctioned Russian company — were granted the right to import steel tariff-free. (The Russian subsidiary’s exemption was reversed after it became public knowledge, with officials claiming that it was a “clerical error.”)

So what are the criteria for these exemptions? Nobody knows, but there is every reason to believe that political favoritism is running wild.

Even worse, Krugman argued, Trump's abuse of trade policy degrades established international norms that have reduced restrictionist trade policies globally. In effect, he said, under Trump, the country has "thrown away its negotiating credibility."

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Cody Fenwick is a reporter and editor. Follow him on Twitter @codytfenwick.