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Yahoo
a day ago
- Business
- Yahoo
5 Reasons Trump's Trade Deal With China Is Bad News for the Middle Class
President Donald Trump's latest trade deal with China may look like a diplomatic win, but for the American middle class, it comes with hidden costs. Trending Now: Find Out: While tariffs are being reduced in exchange for promises from Beijing, households could still face higher prices, disrupted supply chains and reduced job growth. Here are four reasons Trump's trade deal with China is bad news for the middle class and what families can do to protect their finances. Higher Consumer Prices Despite Tariff Relief Even as the U.S. and China approach an August trade deal deadline, prices on many consumer goods remain elevated, and middle-class households continue to feel the strain. Some experts argue that the new tariffs may not drastically shift average import prices. However, middle-class families are more likely to feel the impact in specific categories, such as electronics, tools and household goods. 'U.S. companies scrambled to import as many goods as possible to stockpile before new tariffs were fully implemented, mitigating the immediate impact of tariffs on prices,' said Bryan Riley, Director of the Free Trade Initiative at the National Taxpayers Union. Riley said that since imports from China account for just 13.2% of total U.S. imports, increases in the price of specific Chinese goods may not push up the overall import average. However, they can still significantly affect middle-class budgets for everyday items. Read More: Erosion of Real Incomes and Job Losses An analysis by the Federal Reserve Bank of San Francisco warned that Trump's trade measures could cut national real income by around 0.4%, while losses in services and agriculture might offset job gains in manufacturing. 'What's pitched as economic growth is actually a slow bleed: Manufacturing jobs won't magically return, and small businesses relying on predictable import costs are about to face more whiplash,' said Patrice Williams Lindo, CEO of Career Nomad. 'Wages stay stagnant while everyday costs climb. And here's the kicker — there's no workforce investment baked into this deal. That means your job security, benefits and opportunities to grow could evaporate, especially if your industry leans heavily on exports or global sourcing.' Volatile Markets and Supply Chain Instability Although the China deal eased recession fears, experts said that uncertainty around ongoing tariffs still disrupts manufacturing and logistics. Businesses may hold back investment or retool supply chains, raising costs for middle-class consumers and slowing hiring. For example, uncertainty remains one of the most significant threats to economic momentum, particularly for businesses making long-term decisions. 'The real issue is that this deal doesn't create clarity. It reinforces an environment of 'wait and see,' Robert Khachatryan, CEO and founder of Freight Right. 'That's not how you build confidence in the economy.' Khachatryan added, 'You can't expect small and midsize businesses, who employ a huge portion of America's middle class, to plan for the future when they're stuck playing defense against the next round of tariffs.' Missed Middle-Class Priorities in the Deal While the latest Trump-China deal touts manufacturing wins, some economists warn it overlooks the broader economic trade-offs that directly affect the middle class. 'We have an experiment,' said Michael Froman, president of the Council on Foreign Relations, in a recent interview on Conversations with Jim Zirin. 'In 2018, President Trump imposed 25% tariffs on steel. Seven years later, we have 1,000 more steelworkers, but 75,000 fewer workers in manufacturing sectors that relied on steel, and a 30% drop in steel sector productivity.' This kind of trade-off may deliver political wins, but it overlooks how tariff-driven policies ripple into everyday life for the middle class. 'Over time, reduced job stability in trade-sensitive sectors and a slowdown in wage growth may exacerbate economic insecurity for families already stretched thin by inflation and debt servicing costs,' said Jean-Baptiste Wautier, a private equity CIO and World Economic Forum speaker. How To Protect Your Budget Middle-class families can shield themselves by using rewards or rebate programs and strategically stockpiling essentials before potential tariff increases. Julian Merrick, founder and CEO of Supertrader, a fintech firm focused on global markets, recommends starting with a small emergency fund, even setting aside $200 to $300, which can help families avoid debt when unexpected expenses arise. 'It also helps to cut back on spending in categories where prices are rising — things like tech, clothes or imported goods,' Merrick said. 'Families should avoid taking on new high-interest debt right now, especially for non-essentials. And for those with investments, make sure the money is spread out across different industries.' Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 6 Hybrid Vehicles To Stay Away From in Retirement This article originally appeared on 5 Reasons Trump's Trade Deal With China Is Bad News for the Middle Class Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
03-06-2025
- Business
- Forbes
New Report, Same Result—High-Tax States Lose Residents, Low-Tax States Gain Them
Moving house. Family loading or unloading moving van. The number of movers in the United States has been declining since the mid-1980s, but millions of people still move each year. A new report from the National Taxpayers Union Foundation shows that low-tax states have been gaining residents while high-tax states have been losing them, and that this migration is impacting state revenues. According to the report by Andrew Wilford, from 2011 to 2021 Florida gained the most residents, adding 1,591,626 people from other states. Texas was second and added 1,268,227 new residents. These were the only states to gain more than one million people over this period. Meanwhile, two states lost more than one million people: New York lost 1,757,720 and California lost 1,632,774. The map below shows the rank of each state according to the number of residents gained (or lost). Illinois, New Jersey, and Massachusetts also lost a substantial number of people, while North Carolina, Arizona, and South Carolina gained residents. Map of population changes, 2011 - 2021 When people leave, they take their money with them. The nearly 1.6 million people who moved to Florida brought almost $196 billion of adjusted gross income (AGI) along with them. On the other hand, the 1.76 million people who left New York took just over $111 billion of AGI out of the state. The table below shows the top five and bottom five states in terms of net AGI and population growth from 2011 to 2021. Net population and AGI It is not a coincidence that on average the states that gained the most residents and AGI are lower tax states while those that lost residents and AGI are higher-tax states. The average top individual income tax rate in the top five gaining states was 4.1%. In the bottom five states it was 8.6%, or more than double. In the Tax Foundation's more comprehensive ranking of state tax climates, New York, New Jersey, California, and Massachusetts all rank in the bottom 10, while Illinois ranks 37th. Florida, Texas, North Carolina, and Arizona are all in the top 15. Among the top gainers, only South Carolina falls outside the top 15 at number 33. The states in the top five also have warmer weather than those in the bottom five, apart from California, and that certainly explains some of their appeal. But policies matter, too, and high taxes repel residents, especially higher earners. State governments raise revenue through various taxes, including income taxes, sales taxes, and taxes on businesses. When money leaves the state, it cannot be taxed (for the most part, but more on that below), and all else equal this means less revenue for the government. Extrapolating from the migration data from 2011 to 2021, Wilford estimates the amount of revenue each state gains or loses due to residents coming or going. He estimates that outmigration from California costs the state $4.5 billion in revenue annually, while Florida gains $4.1 billion. Other Southern and Mountain states also gain revenue, as shown in the map below, while states on the West Coast and in the Midwest and Northeast regions of the country lose revenue. Government Revenue Change Some states understand that taxes matter. Since 2021, 27 states have reduced the rate of at least one major tax, including Georgia, Idaho, and Utah. This is smart, since the evidence clearly shows that taxpayers generally prefer states with lower taxes. Other states, however, are not getting the message. New York and California refuse to implement broad tax relief despite losing residents. Instead, they routinely try to impose taxes on out-of-state taxpayers and businesses to fill holes in their budgets. A few years ago, California and New York tried to get around the Interstate Income Act of 1959 by imposing tax obligations on out-of-state businesses that simply offered post-sale customer service via their website. California legislators have also introduced a wealth tax that would apply to high-wealth taxpayers, even those who leave the state for lower tax jurisdictions. Instead of levying more taxes, high-tax states should fix their tax codes. They can lower their top individual income tax rates to encourage work and reduce their business taxes to encourage entrepreneurs to start and grow businesses. Moving to a flat income tax with only one rate is one way to make it easier for people to comply with the tax code, saving them time and money. Indiana, for example, has a flat rate of 3.05% and it plans to lower it to 2.9% by 2027. Compare that to California, which has 10 income tax brackets and a top rate of 13.3%. Ouch. NTUF's report is just the latest reminder that people do not like to pay taxes, especially when they do not see the benefits. States that keep taxes low while providing sufficient services and maintaining public safety will continue to attract residents. States that insist on high taxes will repel residents, especially wealthier ones who tend to be the most mobile. Losing people is bad—bad for growth, bad for government budgets, and bad for morale—and states that ignore the role taxes play in migration will find themselves in a bad place.
Yahoo
14-05-2025
- Business
- Yahoo
Trump's 'Deal' With China Leaves American Consumers and Exporters Facing Higher Tariffs Than Before
On its own, the deal struck Monday between the U.S. and China to de-escalate the trade war is undeniably a positive development. As part of the deal, the U.S. will temporarily lower tariffs on Chinese imports from 145 percent to 30 percent (which will be applied on top of other tariffs imposed by the first Trump administration). That may be enough to stave off the worst consequences of the tariffs and might unfreeze the flow of goods across the Pacific Ocean. More broadly, however, the deal is a tidy illustration of how President Donald Trump has conducted his global trade war. With China, Trump hiked tariffs to astronomical levels while promising those taxes (which are paid by Americans) would unleash prosperity and create jobs. Then, the White House celebrated the agreement that reduced those tariffs as "the art of the deal." They are literally doing the meme. But the "deal" means that imports from China will be subjected to significantly higher tariffs than when Trump took office. Those tariffs will continue to be a serious economic burden for American businesses and consumers, and the threat of even higher tariffs remains—because the "deal" only pauses those tariffs for 90 days, and because Trump's mercurial nature means no one can really be sure what is coming next. "A pause is not a solution. It's a stay of execution for small businesses that still don't know future product costs, and in many cases have taken steps that can't be undone," wrote Dan Anthony, president of the Trade Partnership Worldwide, an international economic think tank. Steve Lamar, president of the American Apparel and Footwear Association, called the 90-day pause "welcome" because it may thaw what had effectively become a trade embargo between the two countries. However, the remaining 30 percent tariff, which is stacked on top of preexisting tariffs from Trump's first term, "will still make for an expensive back to school and holiday season for most Americans," Lamar said in a statement. "If freight rates spike due to the tariff-induced shipping disruptions—which will take months to unwind—we could see costs and prices creep up even further." The Penn Wharton Budget Model's tariff simulator estimates that the remaining 30 percent tariff on all imports from China would be a $639 billion tax increase over 10 years. Meanwhile, American exports to China will also face higher tariffs in the wake of this "deal" than they did in the pre-Trump status quo. The 10 percent tariff that China will continue charging on American imports will be one of the highest tariffs in the world for American goods entering foreign countries, notes Bryan Riley, director of the National Taxpayers Union's Free Trade Initiative. That's despite the White House repeatedly claiming that Trump's trade war is intended to lower barriers to American exports. By their own metric, this deal fails. Any de-escalation of what could be a catastrophic trade war between the world's two biggest economies is an encouraging sign, but both America and China are still worse off than they were a few months ago. Trump has used constitutionally dubious economic powers to raise and then lower tariffs, creating huge costs and even greater uncertainty. Rather than praising the president for backing down from an insane position, as the White House believes Americans should do, the proper response to Trump's latest tariff maneuvers is the same as it has always been: Congress must take away his tariff powers. The post Trump's 'Deal' With China Leaves American Consumers and Exporters Facing Higher Tariffs Than Before appeared first on
Yahoo
06-03-2025
- Business
- Yahoo
Lawmakers express concern about tariffs
WASHINGTON (NEXSTAR) – Lawmakers from both parties are voicing concerns over President Donald Trump's recent tariffs on major U.S. trading partners, warning that the increased costs could hurt American farmers and raise prices on everyday goods. The tariffs include a 25% increase on certain imports from Mexico and Canada, as well as an additional 10% hike on goods from China. Lawmakers and industry experts say the impact will be felt across the agriculture sector. 'The cost of living is going up,' said Rep. Brad Schneider (D-Ill.). 'Farmers' ability to sell their products overseas is going to be affected, and their ability to keep their farms open is going to be affected. This hurts.' Brandon Arnold, Executive Vice President of the National Taxpayers Union, shared those concerns, pointing to past financial aid given to farmers under Trump's first administration to offset similar trade policies. 'We had to make farmers whole to the tune of tens of billions of dollars just to make sure they weren't being hurt hard,' Arnold said. Despite growing opposition, the White House is standing by the tariffs. White House Press Secretary Karoline Leavitt defended the policy, arguing that tariffs will ultimately benefit the U.S. economy and workers. 'The president believes in tariffs because they'll ultimately make America rich again,' Leavitt said. 'They're going to raise revenue and help us pay down our debt.' Rep. Glenn 'GT' Thompson (R-Penn.), who chairs the House Agriculture Committee, said he hopes Trump will reconsider the move, though he acknowledged the potential need for reciprocal tariffs. 'I'm hoping that we won't see tariffs,' Thompson said. 'But that said, I can't disagree with reciprocal tariffs.' The next round of tariffs is expected to go into effect in April. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
