'No More Income Taxes!' - The 10% Trump Tariff Explained

WHAT IS A TARIFF:
A tariff is essentially an extra "tax" imposed when importing goods from one country to another, designed to make foreign products more expensive and encourage consumers to buy locally, which benefits the domestic economy. However, it's important to note that this 'tax' is paid by the person or company importing the products - not by the country that makes the product. So, if Apple imports from China - Apple is responsible for paying the tariff - not China.

BENEFITS OF TARIFFS:
-They protect US Companies from Foreign Competition.
-Increased Job Growth.
-Higher Government Revenue.
-Favorable Trade Negotiations.

DOWNSIDES OF TARIFFS:
-Higher Prices For Everyone
-Retaliation From Other Countries
-A Decline In Economic Growth
-Less Competition Could Lead to Less Innovation

TARIFFS IN 2025:
On November 25th, it was announced that Trump would enact an executive order to create “an additional 10% tariff on Chinese imports, as well as an additional 25 percent tariff on Mexico and Canada.” These tariffs would continue until China, Mexico, and Canada addressed the movement of 'bad things' and undocumented people across the US border - and, the impact could be pretty significant.

After all, in response to these announcements, “Canada and Mexico said that they would retaliate with tariffs on U.S. products if tariffs on their U.S. exports were imposed” - and, as you would expect, China reflected the same sentiment, shortly after. Mexico’s president even said that “neither threats nor tariffs will solve the issue of migration or consumption of bad things." (I made this PG for YouTube).

IMPACTS:
If history is any indication, Trump can move forward with tariffs using rather specific law, they wouldn’t be the “economic boom” that some people think it would be, and instead, it’s said that “The measures proposed could hit a number of strategic US industrial sectors hard, add approximately $272 billion a year to tax burdens, raise goods prices, lift interest rates, and sap strength in an already-vulnerable household sector.”

To make matters worse, in terms of existing tariffs: In 2022, they generated $80 BILLION DOLLARS for the US Government - which, was just 2% of all tax revenue - enough to keep the government running for just 15 days. This pretty much suggests that it would be IMPOSSIBLE to fund the US government with tariffs alone, and this is purely ‘wishly thinking’ with no chance of actually becoming a reality.

WHY TARIFFS NEXT YEAR?
The reality probably lies somewhere in the fact that the upcoming administration believes that our reliance on China is seen as a bad thing, both economically and politically - and, he could threaten tariffs as a way to negotiate a more favorable trade deal for the United States.

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[upperhandcustoms]

Income tax didn’t exist until 1862 when Lincoln implemented a 3-5% tax based on income level to fund the civil war. Now income taxes vary between 10-37% and we are still in debt. The government doesn’t have an income problem, it has a spending problem.

[austinballard]

veteran here. We had a budget for our unit on base. if leadership didnt spend the full amount, they were fearful the budget would be less the next year. That drove them to be frivolous, and buy whatever they could, even if that didnt benefit us. Wasteful military spending is a huge issue that goes without notice.

[charlieinabox]

I’ll take 40% of my income back for 40% on material goods I don’t want. Let me decide how to spend my money.

[caps]

If it removes income tax, I’ll take it. Losing about $18k to income tax this year. If tariffs would increase my cost of living by $4k but remove income tax, I’m still coming out ahead by $14k.

[ebony_shogun-]

Everyone can agree that wasteful spending should be stopped. Now we all need to agree on what is 'wasteful spending'.

[Okami]

One thing we can all agree on, cut government wasteful spending.

[jaybartgis]

5:27 but you're not telling the other side of the story. Those countries like China who "retaliated" were hardly buying our goods in the first place.

[Not_Sure_]

I'm all for getting rid of income taxes. Here's why: we pay taxes on our income, then taxes on goods we buy. We are taxed twice right out of the gate. Then we are taxed on things we sell. We are taxed if we buy stock and sell it at a higher price. We are taxed to live in a house we already bought. We are taxed to drive on certain roads. Every single little thing we do with our money is taxed. And where does it go? Overseas. Politicians pockets. Rarely do we ever see it help us, the common citizen. I will gladly accept my FULL PAYCHECK that I earned, and buy American made products, or choose what foreign products I'll buy and pay taxes on.

[gavinoleary]

Keep 40% more of your money, pay 10% more for foreign items, I'm cool with it

[ScottBurtnick]

In the private sector, you're rewarded if you go under budget. In the government, agencies are rewarded with a bigger budget for the next year if they spend all of their money in the current year. This leads to unnecessary waste and needs to be changed.

[Dandrinetwork]

If he cuts federal taxes I get to keep 25k + a year from my check, why would I complain about a 2 dollars toilet paper?

[jimbovetteja]

Economist here, two things you missed. First, tariffs force company to bring manufacturers back to their home company which raises wages. If the increased wages out pace the increased cost of goods then the tariff was successful. On that same note, higher wages increase consumption which decreases the cost of goods. Second, what we know about tariffs are highly theoretical. Economic data was not collected prior to 1915ish. The exact year escapes me, but we only started collecting economic data when we started moving away from tariffs. What we know of them are based primarily off of theoretical model's which have one major downfall, they function in a vacuum free of exogenous variables. Long story short, we really don't have any idea how this will play out and you are 100% correct, the key to fixing our economy is cutting government spending, more specifically over spending. What is driving the rise in cost of goods is inflation which is caused not by corporate greed, but government greed in the form of printing money that we do not have further devaluing the dollar. A LOT of our ussues would go away if we moved away from Keynesian economics.

[johnl]

Doesn't matter how you slice and dice it Graham, at the end of the day the consumers are the ones hurting.

[DelveSideways]

In the end, it is always the consumers that pay higher prices for products, not the companies that supply them.

[katiemiles]

Way to ignore the fact that Europe and China highly tariff our goods.

[KaikanoSei]

Until 1914 tarrifs were the ONLY federal tax.

[loisavci]

Wasteful spending happens because it's incentivized. A government unit that actually cuts costs and comes in under budget is punished by having a smaller budget for the next year. To have any hope of maintaining their budget or possibly seeing an increase they need to spend their entire budget or maybe overspend a bit.

[RanDom-ifee]

Dang, i have never seen such a big creator engage with their community so much. You reply and heart a LOT of comments. Thank you for that.

[dustingre]

Tariffs are a negotiation tool. Imagine if we’re currently paying 30% tariffs (tax we pay) to a country that we only receive 10% tariffs for our goods. Cost of goods is 20% higher. Now imagine someone evened out those tariffs. 10% in and out. The other countries cost won’t change & our tax income won’t change, but we’d now pay 20% less for anything from that country.

[avres]

Seems like an excuse for companies to continue to price gouge and more than they already are…