Obama's Chief Economist Calls Trump's China Tariffs a 'Giant Tax on American Consumers'

A chief economist in former President Barack Obama's White House branded the Trump administration's tariffs on trade with China "a giant tax on American consumers," and said they are causing as much harm here as they are over there.

Austan Goolsbee, who is now an economics professor at the University of Chicago's Booth School of Business, told The Al Franken Podcast that President Donald Trump's demands of China are vague and his tariffs counterproductive.

Washington and Beijing are still in talks to negotiate a new trade deal. But the tariff war is escalating in the background, and evidence shows that both consumers and manufacturers are feeling the pinch in both countries. Consumers are paying the cost of the tariffs.

"We are literally putting a giant tax on American consumers, which we the American people are paying—all of those tariffs—for an amorphous thing that he says, 'I'm beating up China because they're stealing our intellectual property,'" Goolsbee, who chaired Obama's Council of Economic Advisers, said.

"But he's not giving China any way to solve this...He's not making any demands. He's just piling on tariffs. All tariffs are terrible. Tariffs on suppliers and intermediate goods, things that are used in US manufacturing, are especially terrible and we're doing tons of those.

"Steel, aluminum, so every job you think you're saving in steel you're losing multiple jobs in the steel-using industries, of which there are many more than steel-producing.

"We're not making specific demands and the punishment that we're enacting is one that is harming us just as much as it's harming them."

Trump opened up the trade war with China and others, including allies in Europe and Asia, arguing that America is getting a raw deal on the current terms. He is using tariffs to force trade partners to the negotiating table and draw up new deals.

"We are doing very well in our negotiations with China. While I am sure they would love to be dealing with a new administration so they could continue their practice of 'ripoff USA' ($600 B/year),16 months PLUS is a long time to be hemorrhaging jobs and companies on a long-shot," Trump tweeted yesterday.

"And then, think what happens to China when I win. Deal would get MUCH TOUGHER! In the meantime, China's Supply Chain will crumble and businesses, jobs and money will be gone!

"For all of the 'geniuses' out there, many who have been in other administrations and 'taken to the cleaners' by China, that want me to get together with the EU and others to go after China Trade practices remember, the EU & all treat us VERY unfairly on Trade also. Will change!"

A Harvard CAPS/Harris poll of 2,531 registered voters at the end of August found that 63 percent believe the tariffs are hurting the U.S. more than China. Moreover, 74 percent said U.S. consumers, not China, pay the cost of the tariffs.

However, an even 50/50 split approved and disapproved of the tariffs, and 80 percent agreed that it is better to fix trade issues with China, such as intellectual property theft, now, rather than kick the can down the road.

Donald Trump China trade war tariffs
US President Donald Trump speaks during an event establishing the US Space Command in the Rose Garden of the White House in Washington, DC, August 29, 2019. Trump's China tariffs are hurting American consumers. SAUL LOEB/AFP/Getty Images