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Yellen criticizes Trump’s idea to replace income taxes with tariffs

Treasury Secretary Janet Yellen criticized former President Trump for proposing to replace part of the U.S. income tax with higher tariffs on imports to make up for lost revenue.

The former president outlined her ideas while meeting with Republican lawmakers on Capitol Hill last week. Yellen appeared on ABC’s “This Week” on Sunday, where host Jonathan Karl asked whether Trump’s ideas were “feasible.”

“Tariffs well in excess of 100 percent would be necessary,” Yellen said.

“The impact will be to make life harder for working class Americans,” she continued, adding that it “will hurt American businesses.”

The Trump campaign described the tariffs as a key feature of an economic strategy focused on domestic manufacturing.

Experts from both parties have raised doubts about President Trump’s latest tariff proposals, which would cost Americans about $1,500 a year, according to an analysis by the left-leaning Washington think tank the Center for American Progress.

The study echoed Yellen’s lead by saying tariffs are more harmful to U.S. consumers and importers than those of foreign adversaries like China.

For example, taxes on imported goods would translate into an additional spending of $90 per year on food, $120 on oil, $220 on cars, $70 on clothing, $80 on electronics, and $50 on furniture and appliances.

Tariffs are currently a small source of U.S. revenue, accounting for 1.7% of federal revenue in fiscal year 2024.

Both President Trump and President Biden have said domestic manufacturing is central to their economic policies as they campaign across the country ahead of the fall election.

During the interview, when Kahl asked why Americans are frustrated with prices when inflation is slowing, Yellen defended the Biden administration and its economic policies.

“This is an issue the Biden administration absolutely wants to address,” she said.