The past two presidents don’t agree on much, and consequently the transition from the Trump administration to the Biden administration led to a complete reversal of course in many policy areas. An exception to that has been trade policy, where President Biden has largely continued his predecessor’s policy of expanding barriers to trade. But while bipartisanship is normally welcome, this insistence on restricting consumers’ ability to access foreign goods has real consequences for American shoppers.
As parents around the country shop for the back-to-school supplies their children need, they will probably notice that everything seems to cost more — in fact, the National Retail Federation predicts that back-to-school spending will reach record levels this year. That will probably come as no surprise to inflation-weary consumers, but this time there’s at least one culprit to point to: tariffs.
When you buy clothes or school supplies, there are visible taxes and invisible taxes. Taxes like sales taxes, which appear at the end of your receipt, are highly visible. But taxes on imports are just as impactful in driving up the cost of goods.
Back-to-school supplies like shoes, backpacks, socks, and coats all face tariff rates in excess of ten percent this year. Notebooks incur a 9.5 percent tax, while t-shirts and jeans each face 8.4 percent trade taxes. Newer entrants to the “school supplies” category like phone cases can suffer from even higher tariff rates (20.5 percent).
Recognizing these hidden taxes is necessary for a true accounting of the trade-offs of trade policy. Voters often say that protecting domestic jobs is important to them, but they would say the same thing about keeping prices low. Unfortunately, restricting imports and ensuring affordable prices are usually mutually exclusive policy priorities.
Confusion about the nature of this binary choice is evident in often-conflicting poll results. For instance, in one recent poll, a large majority agreed with the statement that “Trade agreements help the U.S. They allow for the purchase of goods at lower cost, making them more affordable for the average American, and open new markets for US businesses to sell products.”
But at the same time, a solid majority also agreed that “Trade agreements hurt the U.S. American workers and companies have difficulty competing with countries that have looser labor laws and environmental standards, so jobs get shipped offshore and average Americans lose out.”
And while policies can help in some ways and hurt in others, these results are more reflective of the fact that Americans want tariffs that protect jobs but also cause no negative effects on the economy. In other words, they want to have their cake but not have it cost more because of the incredibly restrictive sugar import program.
But whether it’s happening overtly or behind taxpayers’ backs, the last two administrations’ trade policies are costing Americans billions. The International Trade Commission has calculated that new tariffs instituted under President Trump and maintained by President Biden have already directly cost taxpayers $189 billion — a number that does not even attempt to consider indirect costs.
So as you’re buying school supplies this year, take a moment to thank Presidents Trump and Biden for the eye-watering number on the cashier’s display. Their decision to restrict your ability to purchase foreign goods in a globalized economy is a big reason.
