A tariff is a tax. Taxes are bad generally speaking and they are here too. Build the wall, but let’s be honest about it. One way or another Americans will pay for it. People may want a wall. And that seems OK to me (in that it seems legal and within the Constitution), but we’re going to foot the bill one way or another. (I personally would prefer very much not to.)
Trump painted himself into a rhetorical corner here and he should have let the “Mexico is going to pay for it” bit go. That he didn’t is a mistake. Mistakes like this happen when big changes are afoot.
Still, it’s a mistake both in economic and political terms.
(From The Ron Paul Institute)
A tariff, after all, is simply a fancy word for “tax,” and like any other tax, a tariff increases the cost of goods and services to the buyer while limiting choice. In the case of a tariff imposed on American consumers and Mexican producers, costs of production for American producers will go up, and prices for Americans consumers will rise.
Producers who use food, vehicles, electronics, and medical instruments imported from Mexico (such as restaurants, couriers, medical firms, and any company that uses automobiles) will now have higher costs and will be able to produce less, hire fewer people, and sell at the same low prices. American consumers and workers will suffer accordingly. The only ones who benefit will be the tiny minority of Americans who compete with Mexicans for manufacturing jobs, and those who sell to them.
Everyone else will see a decline in real wages as costs rise.