Source: United States Senator for Hawaii Brian Schatz
WASHINGTON – U.S. Senator Brian Schatz (D-Hawai‘i) spoke out on the Senate floor today after President Donald Trump announced a new tariff plan that will levy the largest tax hike on middle-class families in a generation and force families to pay an average of $5,000 more each year.
“Donald Trump is ruining the economy on purpose,” said Senator Schatz. “Starting tomorrow, we’ll be paying more for everything – groceries, food, cars, homes, toys, electronics, everything that you buy. This is about the ability for people to pay for college. This is about the ability for people to retire with dignity and comfort. Trillions of dollars of wealth are being demolished. These are everyday people panicked about how much more expensive their next trip to Walmart or Costco will be, or when they’ll lose their job.”
The full text of Senator Schatz’s remarks can be found below. Video is available here.
Donald Trump is ruining the economy on purpose. He is ruining the economy on purpose. I’m not sure if there’s ever been an American president, let alone a chief executive of any country that has ruined the economy on purpose. The stock market had its worst day in five years yesterday, and I just checked before I delivered these remarks. Just five minutes ago, 1600 down on the Dow Jones, the S&P down 5 percent, Nasdaq 4 percent, the Russell 5 percent. What does that mean as a practical matter? It means if you spent all your life working and saving and investing, and you are on the edge of retirement, and let’s say you’ve got $312,000 plus your Social Security income, you just lost 30 grand in two days because of Donald Trump. You lost 10 percent of what you earned over a lifetime. Now, for Howard Lutnick and Elon Musk and Donald Trump and everybody that surrounds him at Mar-a-Lago, they can ride this out. They can short it, they can buy crypto. They can do all kinds of wonderful things to make sure that they can ride this out. Regular people cannot ride this out.
The dollar hit a six-month low. Layoffs have already started. Consumers are cutting back on spending. And by the way, the data is there. But also just talk to anybody. Just talk to anybody about how they feel about spending right now. And the likelihood of a recession went up 20 percent in a day. JPMorgan now says it’s more than 60 percent likely.
So what is this even for? Why are people so freaked out? Why is the entire world, from friends and partners to adversaries and enemies, scrambling to retaliate against the United States, the indispensable nation? It’s so that Donald Trump can raise trillions of dollars in revenue to pay for the biggest tax cuts for billionaires in the history of the planet.
Starting tomorrow, we’ll be paying more for everything – groceries, food, cars, homes, toys, electronics, everything that you buy. Estimates have home prices ballooning by almost $20,000 per unit. Cars will cost $6,000 more. An iPhone, 250 bucks more. Clothing prices will go up by roughly 20 percent. Also, what we’re going to be a textile manufacturer? That’s our goal as a country is to make t-shirts and socks?
Workers will be laid off, but I guess it’ll all be worth it in the end because this is paid for. What does that mean? It means that in their big budget plan, they need to cut taxes for billionaires, but they don’t have enough money to finance that. And so they’re using tariff revenue to balance out the money that they’re going to shovel to a bunch of billionaires.
Trump is very famous for having few firm, fixed political beliefs. He’s changed his mind about just about everything, but not on tariffs. He’s a self-proclaimed “tariff man.” He’s repeatedly said that the word tariff is the most beautiful word in the English language. And for years, he’s lavished praise on the 20th century tariffs, which, by the way, helped to deepen the Great Depression. So he’s very happy about all of this. Like there should be no mistaking this is what he intends to do. And this is one of the differences between Trump 1.0 and Trump 2.0. He’s doing all the things. He’s actually going through with it. This is not mean tweets and like normal behavior. This is all of the crazy stuff he’s saying is now being effectuated as public policy, as economic policy, as fiscal policy. He’s going through with it. You can no longer be dismissive of these resistance types, these Democrats, these shrill, these partisans, these people who can’t keep their head on straight. These people who just want to punish Donald Trump for saying: “man, that guy is kind of crazy. He’s going to crash the economy.” He’s literally crashing the economy on purpose.
The idea that other countries will just graciously pay the tariffs is a fantasy. Much like Trump’s claim that Mexico would pay for the wall. In reality, it’s American importers who pay the tariffs, and then they pass it on to consumers, which is exactly what happened the last time Trump tried to do this. Economists who studied the tariffs that Trump imposed during the first term on certain goods from China found that it was consumers. It was you that paid the price. So here’s roughly how it worked this time around. There’s going to be math involved here. If these tariffs are expected to raise $6 trillion, as Trump says, that would mean collecting something like $600 billion every year over the next ten years. Broken out by household people are looking at $5,000 a year in added costs.
I bet you Donald Trump doesn’t know anyone personally. Maybe he’s met people, but like in terms of the people he hangs out with that he spends time with, that he likes that he works with, he probably doesn’t know anyone for whom $5,000 is an unmanageable, increased cost. But I know a lot of people like that. In fact, a lot of people in my home state are like that.
They cannot absorb a $5,000 increase in the cost of everything. And that is before you consider the hundreds of thousands of lost jobs and the devastation of small businesses and farmers and others. One small business owner in Iowa put it this way, “Trump’s calling it Liberation Day. Maybe something like Liberation Day liberated from reality.” Farmer in Kansas agreed.
“These tariffs are just absolutely bad news that caused the prices for everything that we buy to go up and the prices for everything that we sell to go down.” Everything that we buy is more expensive. Everything that we sell is cheaper. Does that sound like a smart economic plan?
It’s bad news any way you cut it. But even worse, more confusing, more idiotic, more infuriating is when you look at how they arrived at these rates. These are not actually reciprocal tariffs. Reciprocal tariffs being like essentially country X assesses tariffs in the amount of 15 percent so we reciprocate. We do 15 percent back. This is how they did it.
They used a one size fits all formula to remake the global trading system. They took our trade surplus with any given country. So the way you do it to do reciprocal tariffs is country X says 10 percent, we go back at 10 percent. What they did is say let’s take our trade surplus, which means what we export minus what we import divided by total exports. And then cut it in half. Why they didn’t cut it in a third? Why they didn’t, you know, do some coefficient other than 50 percent? I don’t know, but it’s purely arbitrary. So we have an $18 billion trade deficit with Indonesia. We import $28 billion worth of goods from them. 17.9 divided by 28 is 64. Divide that by two and you get 34, which is surprise, surprise, exactly the rate that Trump set for Indonesia. Half of the differential between export exports and imports literally makes no sense. Like you’ve got a bunch of economists right, left and center going WTF? I cannot believe this is bad policy. But also it’s like childish, childish math.
The White House formula is so bonkers at the same economist that pointed that it pointed to as the basis for the rationale immediately were critical: “they pulled two numbers out of thin air that perfectly cancel each other out. This type of reductionist analysis is very troubling and scares me,” said economics professor Anson Soderbery, whose paper the White House cited even their sources are saying, don’t use my name to justify this nonsense.
Another economist said that the White House had misunderstood his research, which specifically cautioned against excessively high tariff rates like Trump’s. “Making rates higher is a bad idea for the United States. We use supercomputers to find the optimal tariffs. The Trump administration seems to have taken a bit of a shortcut here. Also, our results suggest that the EU should not be tariffs and yet they set high tariffs against them. Finally, our range of optimal tariffs are substantially lower than the ones the administration just announced.” So if you can believe it, we’re in a situation where economists are using supercomputers to find optimal tariff rates. While the president of the United States is using a formula. And I’m not exaggerating that a fifth grader could solve. Now, whether it’s the Signal chat or this formula, this administration’s incompetence is on display every day.
It’s why we now have tariffs in places like Herd Island and McDonald Island, where there are no living human beings, only penguins. Or, as the New York Times noted, “Trump’s decision to put a 32 percent tariff on Switzerland stunned politicians and business leaders in the alpine country. Switzerland has an open trade policy and recently abolished all industrial tariffs.” It’s not reciprocal. If they’re not tariffing us. For countries like Brazil, where we have a trade surplus, they still slap 10 percent. Israel reduced their tariffs to zero, still got the 10 percent. This is not a case of a bunch of Democrats crying wolf just to warn the Republicans. The markets are speaking. They are terrified. And this isn’t about a bunch of billionaire corporations and their profitability.
This is about the ability for people to pay for college. This is about the ability for people to retire with dignity and comfort. Trillions of dollars of wealth are being demolished. These are everyday people panicked about how much more expensive their next trip to Walmart or Costco will be, or when they’ll lose their job. People are already stockpiling supplies. Shortly after Trump’s announcement, JPMorgan described the impact of the tariffs over the next few months like this. “On a static basis, today’s announcement would raise just under 400 billion in revenue, or about 1.3 percent of GDP, which would be the largest tax increase since 1968. The resulting hit to purchasing power could take real disposable personal income growth in the second and third quarters into negative territory, and with it, the risk that real consumer spending could also contract in these quarters. This impact alone could take the economy perilously close to slipping into a recession.”
Now countries are already responding. So it’s not like this is a static situation which can’t get worse because the retaliations are going on. And this idea that all this is just a leverage play, look, there’s 200 countries that we have some sort of trading arrangement with and Donald Trump is very unpopular so asking a leader of a country or a parliament of a country to waive their tariffs at the end, at the end of a economic gun because Trump is bullying them. It’s like not good domestic politics for them. The best domestic politics for them is to stand up to Donald Trump’s bullying. And that’s bad for all of us. We’re not going to wave our way through 194 trading partners.
China just imposed a 34 percent reciprocal tariff for our 54 percent tariff on Chinese goods. And in a truly bizarre turn of events, we forced our allies and adversaries to try to find ways to work together. Earlier this week, for the first time in years, China, Japan and South Korea discuss possible of working together on free trade as a response to Donald John Trump.
This is the most shocking image. This red line continuing to go down precipitously, but among the other most shocking images, there’s a picture of high leaders from Korea… first of all, Korea and Japan are in a better place now. But they are, you know, there have been some diplomatic challenges over the decades and the generations, but they’re in a reasonably good place.
So just to see them shaking hands is a big deal. But to see them shaking hands, literally holding hands with a high official from China to indicate they’re in this together against us. So it is true that Donald Trump is uniting the world. The problem is he’s uniting the world against us.
Look, there is a. Real objective here that we’ve been working on for the last four, eight years. And whether it’s chips or it’s cars or it’s clean energy, we’ve actually increased the amount of domestic manufacturing in the United States of America with good industrial policy and targeted trade policy. But this is mayhem. This is mayhem. John Kennedy, the current senator from Louisiana, said it exactly right. He said tariffs are like whiskey. A little bit can be refreshing, can be useful too much – I’m paraphrasing – very bad things happen. Very bad things are happening.
In the time I took to deliver these remarks, probably some number of tens of billions of dollars of additional wealth from working people was just wiped out. And I want to make one final point, and this is the most important point Republicans can and should stop this, with an exception of maybe 3 or 4 members, almost every Republican senator hates tariffs.
The question is whether they will stand up to Donald Trump, who has taken this decidedly protectionist, anti-market, super harmful direction. But all we need Republicans are in charge of the Senate is for them to exert their constitutionally given authority over the assessing of tariffs. There is bipartisan momentum in that space. But we are not there because what I’m reading and what I’m hearing is they’re willing to give this a couple of months and let me give you a bunch of free advice to my Republican friends.
If you’re going to stand up to him in two months, do it now.
Your people are suffering. People are being laid off. People are about, by the way, most of people, most of what is happening in terms of Trump’s plummeting popularity is what they are seeing on their screens. But in the next week or so, it’s not what they’re seeing in their screens. It’s what they’re seeing when they try to buy something.
It’s what they’re seeing amongst their friends who are being laid off. This is about to get very real, and I advise you against my own political interests, but in the country’s interests, if you’re going to stand up to him in June, my God, do it now. I yield the floor.