Photograph by Nathaniel St. Clair

While everyone is talking about the Republicans’ big tax cuts for Elon Musk and other billionaires, he also is hitting us with one of the largest tax increases in history. This would of course be his massive Big Beautiful Import Taxes, also known as “tariffs.”

We got new evidence yesterday that we will in fact be paying the tariffs, not the exporting countries, as Trump weirdly claims. I’ll get back to this, but first we should be clear how much money is at stake.

Trump is not getting adequate credit for what could be the largest tax hike in US history. At this point, we don’t know exactly how large the tax hikes will ultimately be because Trump changes his tariff schedule almost daily. Trump also lacks the constitutional authority to impose tariffs since this authority is very explicitly granted to Congress, so it’s possible the Supreme Court will nix ultimately nix the Trump tariffs.

But we know in Donald Trump’s America, the Constitution doesn’t mean much, so the lack of authority may not prevent Trump from imposing whatever taxes on us he feels like. And it looks like that will be a lot.

His baseline import tax is 10 percent, with few items coming in with lower tax rates. He seems to have settled for taxing us 50 percent on goods we buy from China. Trump at one point threatened to tax the goods we import from Europe at a 50 percent rate as well, but then quickly backed down, or “chickened out” as they say on Wall Street.

We are sort of shooting in the dark on this, but let’s say that the average import tax ends up being 20 percent. If we applied this figure to last year’s $3.3 trillion in goods imports, that would come to $660 billion.

To make this comparable to the budget numbers we are currently hearing tossed around with the Big Beautiful Bill, we need to calculate the tax over ten years and assume the sort of growth the Congressional Budget Office projects for the economy over this period. That would get us a tax haul of more than $8 trillion over the next decade.

To be clear, this is almost certainly an overstatement, since import volumes will shrink in response to Trump’s massive tax hike. But even if they fell by half, we would still be talking about $4 trillion in new taxes from Trump’s tariffs over this period. That comes to an average of $32,000 per household.

This is about five times the amount the Republicans are proposing to cut from Medicaid. It’s more than 12 times the proposed cuts to SNAP. And if we want to compare it to Elon Musk’s great accomplishments at DOGE, it would be more than 800 times the amount he saved by nixing the AIDS program for Africa that saved tens of millions of lives. In short, Trump’s tax hike is real money.

There are a couple of other points we can make about Donald Trump big tax hike. First, it is incredibly regressive. The logic of this one is very simple. A tax on imports is a tax on consumption. Low and middle-income households generally spend pretty much their entire income. Higher income people save much of their income, so the tax will be a far larger share of the income of low and middle-income households than of the rich.

Also, lower income people spend a much larger share of their income on the goods that are subject to the tariffs. Higher income people spend more money on services like restaurants, gym memberships, and travel, all items that will be much less affected by the Trump tariffs.

The other big point is that, contrary to Trump’s claims, we are paying the tariffs. In Trump’s reality TV world, exporters pay the tariff. He often talks as though the governments of China, Japan, or wherever are going to send checks to the United States government.

Whatever is the case in Trumpworld, in Realityland there is little doubt that the importers pay the tax. Just as a mechanical matter, the tax is paid when the goods are brought into customs by the party that is importing them, as in us.

The argument that the exporters pay the tax would mean that they reduce their prices in response to the tariffs. We got new data on this yesterday when the Bureau of Labor Statistics released data on import prices for May, a month in which most of Trump’s tariffs were in effect.

Nonfuel import prices rose 0.3 percent in May after rising 0.4 percent in April. Over the last year they have risen 1.7 percent. That compares to an increase of just 0.5 percent in the prior year, when we weren’t imposing big tariffs on everyone.

You would have to look at these data very hard to find any evidence that exporters are bearing any substantial portion of the tariffs. This means when Trump boasts about slapping another big tariff on China or the EU he is boasting about hitting US consumers with another big tax. I guess that might be pretty MAGA, but it’s not good news for most people’s pocketbooks.

This first appeared on Dean Baker’s Beat the Press blog.

The post Trump’s Big Tax Hike appeared first on CounterPunch.org.

This post was originally published on CounterPunch.org.