There are many media reports claiming that rising prices are caused by Trump’s tariffs on imported goods (especially from many economists who dislike Trump and from mainstream outlets like CNN). But is that really the case?
The total value of imported goods accounts for about 15% of the U.S. GDP. Of course, depending on the situation, it could be slightly more or slightly less. And when imported goods enter the U.S., additional domestic value‑added is created on top of them. Naturally, prices will rise — but not to the extent people fear.
Every country imposes taxes on imports. Even in Korea, when you include the 10% VAT, the minimum tax burden is at least 10% even if there is no tariff at all — and that applies not only to imported goods but to all goods. In Europe, the rate exceeds 20%. So, are those countries collapsing because of inflation? No.
Countries become unstable because they spend too much money on welfare programs (including unnecessary expenditures). This means governments are already burdening citizens by collecting too much tax — income tax, property tax, and so on.
When property taxes rise, rents increase directly. When rental costs rise, product prices go up. And in the U.S., sales tax directly increases the final price of goods (with no refund). Taxes being added to prices are what directly drive inflation — more strongly and more quickly.
If income taxes rise (for both businesses and individuals), doesn’t that reduce the amount of money the people can spend freely, including investment funds? Then businesses and individuals end up living month‑to‑month, earning just enough to get by, and they cling to job security to survive.
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