The Astonishing Economic Illiteracy of the White House

The press secretary believes tariffs are a tax cut for the American people. Read that again.

Some things just have to be seen and heard to be believed. Watch the above video.

Yes.

Yes, indeed.

Oh boy.

For years there have been questions about Donald Trump’s grasp of tariffs: He has himself suggested they’re taxes on the exporters. Does he actually misunderstand them, or is he simply uninterested in reality? Many have speculated that he might be speaking in shorthand, or oversimplifying for a political audience.

Now along comes Karoline Leavitt, his youthful press secretary, with statements so brazenly incorrect that they leave no doubt: the administration does not understand tariffs. In a heated exchange with Associated Press reporter Josh Boak, she claimed that Trump’s tariffs are “not a tax hike” but rather “a tax cut for the American people.”

To state what is almost certainly obvious to readers of this publication, tariffs are taxes on imported goods. They are paid by American importers, which often pass those costs onto consumers in the form of higher prices. If goods coming from Canada are hit with a 25% tariff, the importer then generally charges the US consumer more to maintain profitability. That extra money goes straight to the government.

Now, if the imports are competing with similar domestic products, then the consumer might migrate to those, and then the effect is to protect US industry for a time. But that is not the case with many and probably most of the imports in the current pointless tariff war – which has been presented by some in the administration, however absurdly, as pressure on Mexico and Canada to do more to halt the fentanyl trade. Either way the idea that tariffs function as a tax cut defies basic economics and elementary logic. Either the speaker is an idiot – or the speaker assumes the listeners are idiots.

When Boak pressed Leavitt on why Trump was prioritizing tariffs over traditional tax cuts, her response was a masterclass in economic illiteracy.