Yellen criticizes Trump’s idea to replace income taxes with tariffs
Treasury Secretary Janet Yellen criticized former President Trump after he suggested replacing some of the United States's income taxes with higher tariffs on imports to make up for lost revenue.
The former president outlined his idea during a meeting with Republican lawmakers on Capitol Hill last week. Yellen joined ABC’s “This Week” on Sunday, where host Jonathan Karl asked if Trump’s idea would be “remotely feasible.”
“It would require tariffs well over 100 percent,” Yellen said.
“The impact would be to make life unaffordable for working-class Americans,” she continued, adding it “would harm American businesses.”
Trump’s campaign described his tariff as a key feature of their economic strategy, which is focused on domestic manufacturing.
Experts on both sides of the aisle have raised questions about Trump’s latest tariff policy proposal. According to an analysis from the Center for American Progress, a left-leaning Washington think tank, the proposal would cost Americans around $1,500 per year.
The study, like Yellen, says the tariff would be more detrimental to U.S. consumers and importers than it would to foreign adversaries like China.
For example, the tax on imports would translate to an additional $90 per year spent on food, $120 spent on oil, $220 on automobiles, $70 on clothes, $80 on electronics and $50 on furniture and appliances.
Tariffs are currently a small source of U.S. revenues, accounting for 1.7 percent of annual federal income in fiscal 2024.
Both Trump and President Biden say domestic manufacturing is the center of their economic agenda while they campaign across America ahead of this fall’s election.
During the interview, Yellen also defended the Biden administration and its economic policies when Karl asked her why Americans are feeling frustrated with prices when inflation has slowed.
“It’s something the Biden administration absolutely wants to address,” she said.