Trump’s 10% Universal Baseline Border Tariffs Are a WIN for American Workers and Families

“To preserve the balance of trade in favor of a nation ought to be a leading aim of its policy.” – Alexander Hamilton

President Trump has consistently been attacked for his tariff policies since his 2016 campaign, despite the fact that the tariffs he invoked as president led to the creation of hundreds of thousands of manufacturing jobs and billions of dollars in domestic investment. The Trump China tariffs, in particular, were so successful that even Joe Biden refused to remove them. In August 2023, President Trump proposed a 10% universal baseline border tariff policy for his second term, which was met with even more vitriol from CCP-funded, globalist, mainstream media outlets: The Washington Post and Wall Street Journal. In reality, Trump’s 10% universal baseline border tariffs will create millions of jobs, grow U.S. gross domestic product (GDP), and reduce inflation.

For decades, economists and federal agencies have used outdated economic models, for example, the standard Global Trade Analysis Project (GTAP) model, to evaluate how international trade deals will help bolster the U.S. economy and support American workers. However, trade models like GTAP are flawed because they do not account for real world circumstances, which has misled U.S. policymakers into making international trade decisions based on securing the cheapest goods for U.S. consumers rather than ensuring American workers have jobs.

For example, the original GTAP model assumes full employment in the economy under all potential international trade agreement scenarios. This is problematic because if economists and data analysts utilize GTAP to weigh potential benefits and consequences of entering the U.S. into a particular trade deal, U.S. job loss because of a predicted surge in imports is not reflected.

 Additionally, the original GTAP model does not exhibit how capital investment—money invested by firms in industrial plants and equipment—is impacted by unbalanced trade, or when one country imports significantly more than it exports. For example, if the United States entered a trade agreement that resulted in a trade imbalance with a foreign country—as it did with the North American Free Trade Agreement (NAFTA)—demand for domestic production would decrease, and demand for overseas investment in production would increase. The GTAP model is incapable of showing how this decrease in capital investment would result in U.S. job loss.

The Coalition for a Prosperous America (CPA), a leading national organization representing domestic producers across various industries of the U.S. economy, developed their own improved version of the GTAP model to account for tariff productivity elasticities and primary factor supply elasticities, to show that when tariffs are invoked, domestic production is increased, and when demand rises for domestic production, both domestic investment increases and U.S. jobs are created.

CPA ran their improved GTAP model in several different international trade scenarios including President Trump’s proposed 10% universal baseline border tariff proposal. CPA also ran a scenario if countries retaliated against President Trump’s universal baseline border tariffs with 10% tariffs of their own. Contrary to the mainstream media’s lies, CPA’s analysis showed that President Trump’s proposal strengthens the U.S. economy and industrial base.  

In the 10% universal baseline border tariff scenario, U.S. GDP increases by 3.61%, 3.3 million jobs are created, real household income rises by 10.43%, and real manufacturing output increases by 3.29%. If these same countries retaliated against the U.S. with 10% tariffs of their own, U.S. GDP would grow by 2.94%, 2.5 million jobs would be created, real household income would rise to 11.46%, and real manufacturing output would grow by 6.06%. As we can see here, tariff retaliation ironically results in even larger gains for real household income and manufacturing, due to an increase in demand for domestic manufacturing. In the retaliation scenario, U.S. families would be wealthier, and industrial base workers would be kept even busier than before.

Although Consumer Price Index (CPI) used to measure inflation does initially rise in both scenarios at 3.81% and 1.01% respectively, this increase is far below the up to 7% annual average inflation rate the United States endured under Joe Biden during his first term, and would only be temporary over approximately four to eight years while the United States adjusts to an economy with a stronger and more secure industrial base. Additionally, the drastic gains in real household income in both scenarios are well above any temporary minor inflationary effects, meaning that Americans will be largely unaffected by any potential price increases.

Based on CPA’s study, President Trump’s 10% universal baseline border tariffs work, and the U.S. would become an even stronger manufacturing powerhouse even if countries decide to retaliate. President Trump understands that the real way to grow an economy is not just through securing cheap imports for U.S. consumers. A successful and strong economy is powered by a vast and diverse industrial base where Americans have jobs and don’t have to rely on foreign countries to make their goods. The Trump 10% universal baseline border tariffs will create stable employment conditions for hardworking Americans, help American families prosper, and ensure that domestic industry is never again cheated by foreign countries.  

S. Karol Paul has experience in trade and manufacturing policy and is a contributor to Peter Navarro’s Taking Back Trump’s America

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