Lutnick says 10% baseline tariff will stick around for “foreseeable future”

Lutnick says 10% baseline tariff will stick around for “foreseeable future”

From cnbc.com

Commerce Secretary Howard Lutnick said Sunday that the 10% baseline tariff rate on imports from other countries is likely to “be in place for the foreseeable future,” echoing President Donald Trump’s comments from days prior. “We do expect a 10% baseline tariff to be in place for the foreseeable future,” Lutnick told CNN’s Dana Bash on ‘State of the Union.’ The commerce secretary rejected the idea that consumers would take on increased costs caused by the tariffs, insisting that business and countries will pay. But data suggests that businesses are already trying to pass costs onto consumers, and ... (full story)

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May 12, 2025 7:08am — Edited

Quoting The Fool

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{quote}Can you show your work? I'd agree it'd probably not be as simple as a straight pass-through. Of course, a sales tax would not be applied to any US-sourced items, also.

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https://www.federalreserve.gov/econr...-20250509.html
This link covers this in a lot of detail. Basic rule of thumb is that 10% global tariffs works out to about a 1% increase in the cost of goods in general. I have seen different estimates that range from .5%-2%. The key thing to watch for is the effect of supply-side shock and upturned expectations that can spiral us into a stagflation economy.

Another way to think of it is this: 30T economy with 3T in imports. This will raise approximately 300B in tax revenues, which is equal to 1% of the economy.

The Fool

May 12, 2025 6:49am

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Quoting AaronWard

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A 10% tariff actually works out to about a 1% sales tax. However the current net tariff regime is probably much closer to 20%.

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Can you show your work? I'd agree it'd probably not be as simple as a straight pass-through. Of course, a sales tax would not be applied to any US-sourced items, also.