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President Donald Trump’s former chief economic adviser is warning people about who will be the most affected by his sweeping tariffs.
Talking about the president’s dramatic trade agenda during a Sunday appearance on CBS News’ “Face the Nation,” businessman Gary Cohn broke down how higher costs on goods always hit poorer people the hardest.
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“The other thing we need to understand about tariffs, and I think this is obvious, is tariffs are highly regressive,” he told host Margaret Brennan. “Meaning that poorer people end up paying a disproportionate percentage of the tariffs because they spend 100% of their paycheck on goods.”
“Wealthier people save a bigger percentage of their paycheck. So, the tariffs are going to affect the poor people more,” explained Cohn, who left the first Trump administration in 2018 after the president announced costly new tariffs on steel and aluminum imports.
Cohn: "Tariffs are highly regressive. Meaning that poorer people end up paying a disproportionate percentage of the tariffs."
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Though consumers haven’t seen prices spike immediately, the Goldman Sachs alum said rising costs are only a matter of time.
“The lag effect of getting goods to this country will not be felt for another two to four weeks,” Cohn explained.
But Cohn’s textbook explanation of how regressive taxes work clashed with an idea the president floated on Truth Social that same day.
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In a Sunday morning post, Trump said Americans making less than $200,000 could see their income taxes “substantially reduced, maybe even completely eliminated” after the country starts collecting increased tariff revenue.
Also predicting “massive” job growth from a rebirth in the nation’s manufacturing sector, he said his economic policies “will be a BONANZA FOR AMERICA!!! THE EXTERNAL REVENUE SERVICE IS HAPPENING!!!”
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Experts have called Trump’s dreams of offsetting a majority of Americans’ income taxes with increased tariff revenue an impossibility.
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In fact, a recent study from the Council on Foreign Relations said that Trump’s trade-off idea is “absurdly off-base” and “mathematically impossible.”
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