Proposed tariffs will counteract tax cuts by more than 25 percent: analysis

Proposed tariffs will counteract tax cuts by more than 25 percent: analysis

President TrumpDonald John TrumpTrump says he will 'temporarily hold off' on declaring Mexican drug cartels as terror organization House Judiciary Committee formally receives impeachment report Artist behind gold toilet offered to Trump sells banana duct-taped to a wall for 0,000 MORE's proposed tariffs on Chinese goods would counteract more than one-quarter of the 2018 effects of the tax cuts he spearheaded into law, according to an analysis from the right-leaning Tax Foundation released Friday.

The group argued the tariffs will hurt the U.S. economy, costing the country jobs and undoing any good caused by the massive tax cuts.

"Rather than playing a game of chicken with the U.S. economy, the administration should allow the [tax law] to do its job and work with allies and the World Trade Organization to address unfair trade practices," Tax Foundation analyst Erica York wrote in the report. "Tariffs will not make us more competitive."

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The Trump administration on Tuesday released a list of $50 billion worth of Chinese imports that could be subject to potential tariffs of 25 percent, and on Thursday the president directed the U.S. trade representative to consider imposing an additional $100 billion in tariffs on Chinese products.

If 25 percent tariffs were imposed on $150 billion of Chinese imports annually, it would translate to $37.5 billion in tax increases in 2018. That amount is more than one-quarter of the $135.7 billion in reduced tax burdens that the Joint Committee on Taxation estimated would occur in 2018 due to the new tax law, the Tax Foundation noted.

"If new tariffs were imposed, they would reduce trade and increase costs for U.S. firms and consumers, resulting in a negative impact on economic output and income," the Tax Foundation wrote.

The proposed tariffs have drawn mostly criticism from Republicans, who worry they could hurt the economy and the GOP's chances of holding its majorities in Congress.

Republicans intended for the tax law to boost domestic investments and wages, and have been making the tax cuts a key part of their messaging ahead of the midterm elections.