When discussing Trump’s reference to a possible 20% tariff on goods from Mexico this morning, CNN anchor Chris Cuomo astutely pointed out that consumers would end up paying for it through higher prices. He’s basically correct. Of course, the higher prices would drive some consumers away, but let’s assume most would be willing to pay the difference.
This line of reasoning is hypocrisy at its finest. CNN (and most left wing) commentators have railed against cutting the corporate tax rate, arguing that corporate taxes come out of the pockets of the rich owners, not consumers. But you can’t have it both ways. A tariff is merely a corporate tax on exports. Firms don’t distinguish between tariffs and income taxes when setting prices. Either taxes are passed along to consumers in the form of higher prices or they are not.
I would like to think that this is real progress for CNN, but I’m convinced the network’s grasp of economic reality is only temporary. It’s all about opposing Trump. The next time they discuss the President’s corporate tax cut ideas, they’ll conveniently return to their original (flawed) position and argue that lower taxes would simply line the pockets of the rich shareholders.