Some 80 days into Donald Trump’s second presidency, there’s growing resistance to a wide range of his policies, as demonstrated when more than a million Americans took to the streets during nationwide Hands Off protests on April 5. Polls indicate that a majority disapprove of the twice-impeached convicted felon’s policies, including his billionaire pal, Elon Musk’s demolition of federal programs, mass layoffs and funding cuts to education, health research and the undermining of popular social safety net programs like Social Security, Medicare and Medicaid.
But Trump’s imposition of across-the-board tariffs on virtually every nation in the world announced on April 2 is also extremely unpopular. The stock market reacted by registering $6 trillion in losses and steep declines since the crash that followed the 2020 emergence of the COVID-19 pandemic. Most economists warn that Trump’s tariff-imposed taxes will harm both the U.S. and global economies, potentially triggering a global recession. A Reuters/Ipsos poll found that 73 percent of Americans expect Trump’s tariffs to trigger higher prices on everything.
Trump has rolled out his tariff policy with an erratic set of contradictory goals that includes generating more government revenue, bringing back manufacturing to the U.S., and using tariffs as a method to extract concessions from countries with which the U.S. has trade deficits. Between The Lines’ Scott Harris spoke with Omar Ocampo, a researcher with the program on inequality and the common good at the Institute for Policy Studies. Here he warns that Trump’s tariffs’ will deepen U.S. economic inequality, as discussed in his recent article, “‘Liberation Day’ Tariffs Will Concentrate Wealth Even More.”
OMAR OCAMPO: The problem with Trump’s tariffs is that it’s widespread across-the-board tariffs on basically every country in the world where there’s a baseline tariff of 10 percent. Some are speculating that the Trump administration just merely looked at our trade balance with Country “X”. And then they just divided it by how much we import. I think this is a fundamentally unserious approach to international trade politics and it’s not a wise plan for re-industrialization.
So this is one of the main reasons why across the board, both on the left and the right they have come out against Trump’s tariffs because Trump’s tariffs alone indiscriminately deployed is not a plan or an industry policy. This is why people are against it.
SCOTT HARRIS: Omar, the thrust of your message in that article, “Liberation Day tariffs will concentrate wealth even more,” the focus of that article is that Trump’s tariffs will exacerbate economic inequality in the U.S., already at the most extreme levels since the Gilded Age of wealth disparity from the 1870s to the early 1900s. We’re going back quite a ways.
So tell us the short answer as to how these tariffs will really make income wealth inequality so much worse here in the U.S.
OMAR OCAMPO: There’s two things here. So the first thing is that one of the rationales behind the tariff regime by Trump, in addition to, you know, bringing back manufacturing and trying to rebalance the trade — is the first stage of trying to dismantle progressive taxation. Because according to the Trump administration, the tariffs are going to bring in so much revenue that we can finally pay off our national debt. We’ll run big trade surpluses to the point that, you know, income tax is irrelevant and no longer makes sense.
We can fund public goods and services with the revenue raised from tariffs. But in my opinion, the only goal that has any real chance of succeeding within the next four years is not revitalizing manufacturing or balancing the trade budget. It’s going to be weakening the progressive taxation.
And I would like to offer a very clear example of how this wealth transfer, income transfer works. And it’s through the national debt. So what is the national debt? When the government spends more money than it raises, it has to borrow money. And who does the government borrow money from? It could be a variety of actors.
And one of the actors of it borrows from is U.S. households and because of the extreme inequality that we have in this country, it’s no surprise that the top 1 percent of households owns the majority share of national debt compared to other households. So now, how does the government pay down the national debt or make its interest payments? It’s through tax revenue.
So since we have progressive taxation, the majority of the revenue that goes to services actually comes from individuals or households who earn high incomes.
But if we implement tariffs and get rid of progressive taxation, then the burden of taxation is heavy on the working class. And then therefore they will start to make up a greater share of the total revenue collected, which is then used to pay off the national debt, which is held disproportionately by wealthy households. So such a wealth transfer. So basically the taxes that the working class will pay will be regressive. They’ll make up a greater share of the of the revenue generated by the U.S., and it will be transferred to the top 1 percent who own a significant share of the debt.
When the wealthy have more money, you know, what do they do with their money? Or when you lower their taxes or eliminate their taxes? What they do with their with their money? They don’t invest it in productive job creation or creating, you know, productive jobs. They just end up buying assets. And one of those assets is government debt. So therefore, the government’s actually going to end up borrowing money from the people they should be taxing.
So this is one of the ways that this equals a wealth transfer or income transfer, because we’re going to be taking the tax revenue from the working class, who are going to make up a disproportionate share of the tax revenue. We’re going to give it to the owners of debt, which is the top 1 percent of households.
Listen to Scott Harris’ in-depth interview with Omar Ocampo(27:11) and see more articles and opinion pieces in the Related Links section of this page. For weekly updates on the Trump authoritarian playbook now underway, subscribe here to our Between The Lines Radio Newsmagazine Substack newsletter to get updates to our “Hey AmeriKKKa, It’s Not Normal” compilation.
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