What is the ‘Trump sales tax’? A look at tariffs and how they might affect Pennsylvania

Vice President Kamala Harris has coined a phrase when talking about the potential future of the U.S. economy under former President Donald Trump: the ”Trump sales tax.”

Harris is referring to Trump’s policy proposal to apply a widespread 20% tariff on all foreign imports, and a 60% tariff on goods coming from China. Trump already levied other tariffs during his presidency, but, for the most part, President Joe Biden didn’t undo those policies.

What Trump’s tariffs and latest proposals have meant, and could mean for consumers — and voters — is wide-ranging, from increasing the prices of household goods to protecting jobs in certain industries.

And while tariffs might not be top of mind for shoppers when buying their dairy and produce, they have the potential to impact Americans’ daily lives. Here’s what you should know.

Tariffs are basically a tax on imported goods produced in foreign countries. The U.S. federal government can apply tariffs to foreign goods imported into the U.S. and other countries can apply tariffs to U.S. goods exported to foreign countries.

Levying tariffs increases the risk of foreign countries doing the same to American goods in retaliation, which could spark a trade war then felt by everyday Americans.

Beginning in 2018, Trump’s presidential administration levied a series of tariffs amounting to $80 billion in new taxes, according to a study by the Tax Foundation, a nonpartisan think tank. Biden kept most of those tariffs in place, and added more on Chinese imports, adding $3.6 billion in new taxes.

As a result, the Tax Foundation analysis found the average U.S. household paid $200 to $300 more in taxes annually.

The Tax Foundation found that Trump’s latest proposals would offset most of the benefits of his other economic proposals.

Trump has signaled that he intends to use heavy, widespread tariffs to raise enough government revenue to make up for significant deficits caused by policies like corporate tax cuts. That’s highly unlikely to work, economists said.

“It’s not going to be a very good source of revenue and I think that’s what’s been lost in discussion around this election,” said economist Joshua Mask, an assistant professor at Temple University.

America’s GDP is too large to subsidize any significant loss of revenue by levying tariffs, Mask said.

In the U.S., tariffs have traditionally been applied to foreign countries whose imports could threaten American production, Mask said.

“What we’ve seen happen in the last 20 years, they’re typically employed as a micro-protectionist strategy, protecting certain industries,” Mask said.

Protectionist tariffs can help to guard American industries from outside competition, said Stephen Herzenberg of the left-leaning Keystone Research Center. Strategic tariffs give a country’s emerging industries “time to climb the learning curve,” he said.

He cited Trump’s tariffs on solar panels, which Biden kept mostly in place, as one example.

“The logic of protectionism for initial development still applies to some extent when it comes to the U.S. trying to become a leader in industries of the future,” Herzenberg said.

Businesses made to pay tariffs may pass that cost down to the consumer.

“If that importer is bringing in something that I as an American consumer buy everyday, and I don’t have an option to buy from a domestic producer, then I’m going to have to pay the full tax,” Mask said.

Karl Kever, an economist at the Bureau of Labor and Statistics, said there is a relationship between several measures of inflation — including how much consumers pay in store and how much producers sell items for — and import and export prices over time.

“What I can see when I’m comparing 2006 all the way up to June 2024, they pretty much do move in concert with each other,” Kever said.

And if a good that’s involved in making a finished product — like raw cocoa in a chocolate bar — changes, that can shift the price of what shoppers see at the store. “If the price of an input goes up, then the finished product could become more expensive as a result of that,” Kever said.

The Peterson Institute for International Economics, a nonpartisan think tank, found Trump’s latest tariff proposals would cost the average U.S. family $1,700 a year, while the progressive Center for American Progress found a 20% tariff would increase household costs by as much as $3,900 annually.

The first tariffs Trump levied, and which Biden initially kept but then changed and effectively decreased, were on steel and aluminum. The steel industry has meant a lot to parts of Western Pennsylvania.

The United Steelworkers Union has supported Biden’s tariff policies on steel, aluminum, and electric vehicles, for example.

“From their point of view,” said Herzenberg, “the steel tariffs in different moments in time have created breathing space for efforts to consolidate U.S. companies, support them in reinvestment, and therefore leading to a situation in which the U.S. retains more of a steel industry than it would have otherwise.”

Mark Boyer, who co-owns Ridgetop Orchards in Fishertown, Pennsylvania said he’s seen tariffs negatively affect Pennsylvanians in less direct ways.

In response to U.S. tariffs in 2018, Canada, China, the European Union, India, Mexico, and Turkey retaliated by levying new, or increasing existing, tariffs on American agricultural products.

“We’re basically just an easy target,” said Boyer, whose family has owned its now-500-acre orchard since 1980.

Pennsylvania is the fourth largest apple producer in the country, according to state data. Downsizing from the apple export industry was subsequently felt in other sectors.

“The consumer may not have felt it, but the people who are surrounded by our industry, they’ve definitely felt it,” Boyer said. “The truck driver whose wife goes in, she might not feel it at the grocery store, but they’re feeling it in the income that comes in,” he continued.

It’s complicated.

“I think tariffs and protecting U.S. industries are good politics,” Herzenberg said. “If you’re a politician, being that tone deaf to working people and what they really think is inexcusable,” he added.

Mask said economists are usually not in favor of tariffs and that they aren’t good for the economy in the long-run, even when they successfully protect an industry, like Pennsylvania steel, from foreign competition.

“You can save jobs through tariffs, there’s just gonna be a limit to that,” Mask said. “You’re basically delaying the inevitable and you’re imposing a cost on the consumer by doing so.”

But the impacts are complex, and experienced differently by different industries.

Boyer once marveled at how he could ship and sell Pennsylvania-grown apples from a port in Philadelphia across the world to India. But he hasn’t sold a load to India since 2018 when the south Asian nation issued retaliatory tariffs.

“Tariffs, they’re a slow burn,” Boyer said. “It will hurt guys,” he added. “It’ll cripple things.”