Politico 2.0 notes that if Trump goes through with those 5% Mexico tariffs he threatened on Friday, it will be a massive tax hike on American consumers at the checkout counter.
If Trump's 5% tariff on Mexican goods takes effect later this month, the president's trade policies would constitute a bigger tax hike than Bill Clinton’s in 1993.
By the numbers: Tariffs already in place against Mexico will increase revenues by $69 billion, the Tax Foundation estimates — or about 0.32% of GDP. Add in the threatened 5% tax on Mexican imports, and that rises to about 0.40% of GDP.
That’s more than Clinton’s tax bill in 1993, which brought in revenues of about 0.36% of GDP after the first year, and just shy of George H.W. Bush’s increase in 1990, which amounted to 0.41% of GDP after year 1.
What to watch: If Trump follows through on his threats — 25% on all Chinese and Mexican imports — those revenues would amount to 1.45% of GDP. You’d have to go back to the 1968 tax hike for a bigger revenue measure, per data compiled by the Treasury Department.
That means 1.45% of GDP would be about $300 billion in new taxes on American consumers, or $1000 bucks per American. That's a recipe for a GOP wipeout at the polls.
It’s no coincidence that most of the Republican senators who spoke out against Trump’s move late last week are up for reelection next year. Even many reliable Trump allies came out with rare expressions of opposition, knowing their own political survival is on the line.
Sen. Joni Ernst of Iowa, representing a state whose farming industry has already been hit by Trump’s trade policies, was one of the first Republicans to call foul on his latest tariffs. "While I support the need for comprehensive border security and a permanent fix to illegal immigration, this isn’t the right path forward," Ernst said in a statement. "The livelihoods of Iowa farmers and producers are at stake.”
Sen. Martha McSally of Arizona, who stood with Trump throughout her ill-fated 2018 campaign before being appointed to the state’s other seat, finally had enough. “While I support the President's intention of stopping unchecked illegal immigration, I do not support these types of tariffs, which will harm our economy and be passed onto Arizona small businesses and families,” she said.
The move is especially awkward for McSally, coming just days after the administration’s petty request for the Navy to keep the USS John McCain warship out of the president’s sight during his recent trip to Japan. McSally, who holds McCain’s seat, has been trying to win back moderates alienated by Trump’s actions without losing support from his sizable base of supporters back home.
Even in Texas, where Sen. John Cornyn looks to be in solid shape, the senator isn’t taking any political chances. Mexico is Texas’s top foreign trading partner, and the state would face the equivalent of $27 billion in taxes if all the threatened tariffs were implemented. “Senator Cornyn supports the president’s commitment to securing our border, but he opposes this across-the-board tariff which will disproportionately hurt Texas," a spokesman for the senator told The Dallas Morning News.
What’s notable about these defections is that two of the senators hail from border states, where fighting illegal immigration is a top priority. When a bipartisan majority of senators rebuked Trump for overreaching his authority to declare an emergency at the border, McSally and Cornyn both stuck with the president.
This time, however, the economic pain threatens to be so significant that they’re no longer willing to stand pat. With their political careers at stake, there wasn’t enough benefit to blindly stick with the president.
Again, I predict Trump will fold on these tariffs when Mitch McConnell makes it clear that even if should Trump somehow survive, he'll face a Democratic House AND Senate in 2021, and that's the end for Donald.
Democrats should already be running commercials in swing states over this.