President Donald Trump, having championed one of the larger tax cuts in recent years, has now enacted tariffs equivalent to one of the largest tax increases in decades.
A CNBC analysis of data from the Treasury Department ranks the combined $72 billion in revenue from all the president’s tariffs as one of the biggest tax increases since 1993. In fact, the tariff revenue ranks as the largest increase as a percent of GDP since 1993 when compared with the first year of all the revenue measures enacted since then, according to the data.
Only the revenue raised in the fourth year of the Affordable Care Act is greater, but not by much.
The nonpartisan Tax Foundation estimates all the tariffs enacted by the president, including the latest increase from 10% to 25% on $200 billion on Chinese goods, will raise $72 billion in revenue, equal to 0.34% of U.S. gross domestic product. Revenue raised in the first year of the 1993 budget and reconciliation act equaled 0.36% of GDP.
“It’s certainly not the largest tax increase in history but it does rank among some of the bigger tax proposals over the last 20 years that have raised revenues,” said Kyle Pomerleau, chief economist with the Tax Foundation.
The revenue raised from the tariffs is more than the tax increases from the first three years of the Obama administration’s ACA, according to the Treasury data. Only in year four of the ACA, when revenue rose by an estimated 0.46% of GDP, did it raise more than the estimate from Trump’s tariffs.
Of course, there are key differences between a tax cut and tariffs.
Trump says Chinese companies pay the tariffs, but most economists see them being borne by U.S. businesses and consumers. That is, they are essentially a tax increase. Over time, however, consumers and businesses can reduce this tax hit by substituting away from high-priced goods and Chinese production. Some of that production could come back to the U.S. or simply move to other countries.
Kent Smetters of the Penn-Wharton Budget Model and a former Treasury official during the Bush administration, estimates that the tariff increase will cost the median U.S. household with earnings of $61,000 about $500 to $550 a year. It’s the equivalent, he said, of raising the Social Security retirement tax by 1 percentage point to 11.6%.
Such a large revenue measure, according to Pomerleau, if it were a tax, would have been subject to considerable economic analysis from the Congressional Budget Office or the Joint Committee on Taxation for the potential effects on growth, inflation and jobs. No such analysis has been offered or is believed to have been conducted by the administration regarding the current tariffs.
And the revenue measure is by far the largest enacted without congressional approval. Congress, in a series of laws, has ceded to the president vast powers to levy tariffs.
Apple’s earnings would drop by nearly 30% if China bans its products
Tim Cook, Apple CEO
John Chiala | CNBC
The U.S.-China trade war could take a big chunk out of Apple‘s bottom line if China retaliates by banning its products, according to an analyst at Goldman Sachs.
Analyst Rod Hall said in a note to clients that Apple’s earnings could drop by 29% if the company’s products were banned in mainland China.
Apple’s China business accounted for more than 17% of its sales in its fiscal second quarter, coming in at $10.22 billion. The company also sells billions of dollar worth in iPhones every year in China.
“Should China restrict iPhone production in any way we do not believe the company would be able to shift much iPhone volume outside of China on short notice,” Hall said. “We believe that Apple is near its annual rapid ramp of new iPhone production to prepare for new device launches in the Fall so even a short term action affecting production could have longer term consequences for the company.”
Hall also noted that China’s “tech ecosystem” and local employment could take a hit if Apple products are banned. Most of Apple’s supply chain rests in mainland China, including the iPhone’s final assembly, which is executed at Foxconn.
Apple shares are down 7% for the month through Tuesday’s close as China and the U.S. ratchet up trade fears. The U.S. hiked tariffs on $200 billions worth of Chinese goods earlier in May. China retaliated by raising levies on $60 billion worth of U.S. imports.
Hall is not the only analyst raising concern over Apple’s exposure to China. On Monday, HSBC analyst Erwan Rambourg cut his price target on the tech giant to $174 per share from $180. Meanwhile, Credit Suisse analyst Matthew Cabral said Tuesday that Apple’s earnings per share would fall by about 15 cents a share for every 5% drop in Greater China sales.
England will ban plastic stirrers, straws and cotton swabs from 2020
saulgranda | Moment | Getty Images
A ban on plastic drinks stirrers, straws, and plastic-stemmed cotton swabs will come into force in England next April.
“Urgent and decisive action is needed to tackle plastic pollution and protect our environment,” Environment Secretary Michael Gove said in a statement Wednesday.
“These items are often used for just a few minutes but take hundreds of years to break down, ending up in our seas and oceans and harming precious marine life,” he added.
The ban follows on from a consultation which found that more than 80% of respondents supported a ban on the distribution and sale of plastic straws, with 90% backing a ban on drinks stirrers and 89% in favor of a ban on cotton swabs. The consultation ran from October 22, 2018 to December 3, 2018, and had 1,602 respondents.
Outlining details of the ban, the U.K. government said there would be exemptions to make sure that people with a disability or medical requirements could continue using plastic straws.
In practice, this means that while restaurants and bars will not be allowed to display plastic straws or “automatically hand them out” they will be able to provide them upon request.
Another exemption will apply to the use of plastic-stemmed cotton swabs for “medical and scientific purposes” where such items are “often the only practical option.”
The CEO of Surfers Against Sewage, Hugo Tagholm, said the charity welcomed the ban. “Stopping the production and distribution of these single-use plastic menaces will prevent them from polluting beaches nationwide,” he added. “It’s a really positive and bold step in the right direction in the battle against plastic pollution.”
Several major businesses are already looking to move away from using plastic in their stores. Fast food giant McDonald’s is rolling out paper straws to stores in the U.K. and Ireland, while upscale supermarket Waitrose now only offers paper straws in its cafes.
The issue of plastic pollution is a big problem. Europeans produce 25 million tons of plastic waste per year, according to the European Commission. Less than 30% of this is collected for recycling.
Twitter exchange with Elon Musk lands a British man a job at Tesla
Tesla has hired a British man behind a viral tweet that caught the attention of Elon Musk last month.
Adam Koszary, who engineered a viral Twitter exchange between Musk and an English museum, will begin a new role as Tesla’s social media manager in July.
Back in April, Koszary, the digital lead for the Museum of English Rural Life (MERL), tweeted a photo of a ram with the caption: “Look at this absolute unit.”
The picture has been liked more than 100,000 times to date – and its popularity really took off when Elon Musk used the image as his own profile picture on Twitter.
“I’m an absolute unit too,” he said in a tweet, temporarily changing his Twitter bio to “absolute unit.”
In response, the MERL switched its own picture for one of Elon Musk, sparking an ongoing exchange between the two accounts.
Koszary, who had been due to start a new job at the U.K.’s Royal Academy of Arts (RAA), announced on Twitter on Tuesday that he had instead accepted a role with Tesla.
“I’m no longer moving to the Royal Academy. Instead, I’ll be Tesla’s Social Media Manager from July,” he said.
Sob! We’re obviously very sad that the lovely and talented Adam now won’t be joining us, but know he’ll do a great job at Tesla (and Adam, please don’t forget to send over that RA-branded Model S we discussed). If *you* want his job, apply here -> https://t.co/9GH6lHJfzC
— Royal Academy (@royalacademy) May 21, 2019
The RAA said in a tweet on Tuesday that it was “very sad that the lovely and talented Adam now won’t be joining us, but know he’ll do a great job at Tesla.”
A spokesperson for Tesla was not immediately available for comment when contacted by CNBC.
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