President Joe Biden and former President Donald Trump
are debating about tariffs. If there's 10% tariffs, everything coming into the
country. That's going to cost the average American $2,500 a year
more. But, do you notice he never took out my tariffs? He can't because it's too much money. But not everybody supports tariffs. The reality is that it ends up being a tax on American
consumers. It's a hidden cost. Trump's proposed 10% tariff on all imports could cost
the U.S. consumers more than $300 billion a year. The irony here is that while both Trump and Biden talk
about the importance of reducing inflation, tariffs actually will increase
prices. American firms have to pay the tariffs. Then many companies, they need to recover the cost
increase. So what do they do? They have to pass the cost increase to the consumers. It also contributes to part of the inflation that
we're facing right now.

And Americans are still paying for tariffs imposed by
Trump during his first term. Tariffs that Biden has largely maintained. Over $233 billion in trade war tariffs have been
collected through March 2024. Over 60% of the total, about $144 billion, was collected
under Biden's administration, while nearly 40% was collected during
Trump's time in office. So, which candidate's tariffs will be more expensive
for the American consumer, and which trade war would American voters rather pay for? Tariffs are a tax on imported goods or services from
another country. Policymakers argue tariffs can be a tool to protect
and help grow domestic industries and ensure national security. The mechanism that a politician is trying to achieve
with a tariff is saying, 'Hey, we're going to put up a barrier to the stuff that you can buy from a different
country, so that instead you have to buy it from a producer here at home.' But tariffs may also result in unintended economic
consequences.

Trump's trade war tariffs generated about $233 billion
in duties collected by customs through March 2024, and it is U.S. consumers that paid the extra billions through higher
prices. China doesn't pay the tariffs. The tariffs are paid by American companies that import
Chinese goods, and they pass those costs on as much as they can to their consumers. It comes at the cost of us having to pay a higher price
for that domestically produced good, rather than buying the cheaper foreign alternative. A study from the Federal Reserve Bank of New York found
that Trump's 2018 tariffs cost the typical household an additional $419 per year. We saw in the 2018-2019 trade war, almost 100% of the
tariff was passed through to U.S. consumers. And so that means, yes, U.S. consumers had to pay higher prices. The Biden administration says its recent tariffs will
not have an inflationary impact because the tariffs

only target specific sectors. When the Biden people say it's not inflationary, I
don't know what they mean, and prices of those products are going to go up. We had an experience actually with
steel and aluminum. We saw what happened with that. We had experience with tires during the Obama
administration. They imposed tariffs on foreign-made tires. And what happened? The price of the tires went up. It's not complicated. The U.S. economy and inflation are among the top
concerns for voters. An April 2024 NBC news poll found that 23% of voters
were concerned about the rising cost of living and inflation. 11% of voters noted jobs and economy as key issues. The economics on tariffs are really clear that they're
a tax increase that ultimately we pay. But, the politics on them are actually really
favorable because the tariff is this policy tool that lets a politician say, 'Hey, we're going to punish
foreign producers, we're going to protect domestic

producers.' Despite their differing stances on policy, both Biden
and Trump have common ground when it comes to tariffs. So, on the surface, the tariffs that Trump had imposed,
even during his last term, is really trying to protect jobs. And Biden, to some extent, is doing the same. A closer look at each president's tariff policies
reveals where the ideology begins to differ. Trump is campaigning on getting even tougher on
tariffs if he is elected. You look at Trump. He started the trade war with China
by imposing around 25% tariffs on certain items. And now, he is saying that if he gets
elected, he will try to increase the tariffs to 60%. So, from his perspective it is really America
first. So in that case, Americans should buy the products
made in the United States produced by Americans. I also will pass the Trump Reciprocal Trade Act. That's if China or any other country makes us pay 100%
or 200% tariff or tax,

e will make them pay a reciprocal tariff or tax of 100%
to 200% right back. Trump is talking about very broad tariffs on the whole
world. And that's really not for a specific purpose of
helping U.S. industries. It's really more to sort of show that
America is in charge. Trump has floated ideas like a 10% tariff on every
imported goods, and 60% tariffs on all Chinese goods imported, and a 100% tariff on imported cars. You'd also talked about proposing a 10% tariff. Um, and I wanted to ask you about that because the
center-right American Action Forum, which is a think tank, said that they thought the plan would, quote,
distort global trade, discourage economic activity, and have broad negative consequences for the U.S. economy. Well, they're wrong. It would distort international
trade. It would bring it back to the United States. For President Trump, he's looking at the issue from the
trade deficit.

When he started the trade war, the trade deficit
between U.S. and China is over $350 billion, and now it has
actually gone down. So on one hand, it said that while it is working. But, there's a caveat actually. The U.S. still imports more things from other
countries, but not directly from China. Trump has also talked about replacing the federal
income tax with tariffs and potential tariffs on countries whose citizens may be contributing to
illegal immigration. And, I want you to give us 25,000-28,000 soldiers on
our border to stop the people that are coming in with the caravans. And they laughed at me. I said, that's okay. You don't want to do it, right? Yeah. I'm going to put a 25% tariff on all of your
products, including all of the cars that you're selling. While Trump's tariff proposals are more wide reaching,
Biden's recent approach to tariffs has been targeted.

I'm announcing today 25% tariff on Chinese steel and aluminum products, and will counter China's overcapacity in these industries. Biden announced more tariffs on $18 billion worth of Chinese imports, including 100% tariff on electric vehicles, a 50% tariff on solar cells, and a 25% tariff on steel and aluminum. Starting in 2025, Chinese semiconductor tariffs will double to 50%. When he was running for presidency in 2020, he said that if he was elected, he would actually remove the tariffs imposed by President Trump. But, he didn't. When Biden took office, he maintained most of the tariffs that Trump had put in place. When Biden was campaigning, he talked about the tariffs the way an economist would. Manufacturers and consumers... Losing and paying more. But now, he has kept those tariffs, recommended increasing them. These tariffs are also being paired with massive domestic industrial policy.

So, we have barriers to trade going up, and we also have significant government subsidies going to certain sectors. Thanks to my Chips and Science Act, one of the most significant investments ever in science and technology, we're bringing this vital industry back home where it started in the United States of America. I'm not sure that this really is even going to succeed in the targeted industries that Biden is talking about. His theory is that that's going to create even more incentive for U.S. chipmakers to produce these chips domestically for very highly targeted industries. That might work. Kind of. The problem with that is, when you do it Biden's way and you impose tariffs only on one country, it's very likely that one of the results will be that companies will produce the same product in a different country and avoid the tariff. The Biden administration completed a review of tariffs imposed under Trump and decided to keep the Section 301 tariffs in place.

The conclusion to keep the tariffs is actually a pretty weird one. If you read the Section 301 report, they note how the tariffs have hurt output and employment, especially in manufacturing, how the retaliatory tariffs that they brought about hurt American agriculture. But then, they recommend keeping them and increasing them. In fact, more tariffs from Trump's trade war with China have been collected under the Biden administration than the Trump administration. I don't think any politician right now wants to look soft on China, even though the tariffs are primarily harming the U.S. The story is that these are tariffs on China that we are making China pay. Neither candidate's campaign responded to CNBC's request for comment. Both sets of tariffs would have significant consequences on consumers. Trump's would have much more because they're much bigger. The real political question is, are we going to have higher targeted tariffs under Biden, or are we just going to have significantly higher tariffs under Trump?

The International Monetary Fund warned trade
restrictions could shrink the global GDP by 7%. Economists suggest retaliatory tariffs would also
hinder economic growth. And, foreign countries almost certainly will retaliate. They're just going to do the same thing to us. They're going to impose big new tariffs on U.S. exports to their countries, and that is going to really
significantly hurt American manufacturing because we export a lot to foreign countries. According to an estimate from the center-right American
Action Forum, if trading partners retaliate, it could shrink the U.S. GDP by $62 billion. Mr. President, is there no concern that China could
impose retaliatory tariffs or retaliatory actions that would make doing business in China difficult for
American companies... That's okay ...Which are dependent on China for growth? That's okay? Yeah, sure, they might do that. But you know what? They didn't. So tell Starbucks, tell McDonald's that it's going to
be, all of a sudden, maybe more difficult to do

business there? They didn't do it with me. You know, we went through years, and they didn't do it
with me. What people need to know is, you know, regardless of
what the politicians are telling you, tariffs are not good economic policy. They're not going to help American workers. They're not going to help American consumers. And we're going to be worse off for them. Throughout history, it has been shown that this is not the
effective way to protect jobs. I think that we need to rethink about how we actually
use tariffs to protect the jobs in the United States. The U.S. has tried in industry after industry to
protect job losses, to protect firms from foreign competition or from
technological change. And what you get when you shield a firm from those
competitive forces is not a good outcome. You're shielding them from forces that would otherwise
force them to innovate, force them to change the way they do business, and become more competitive.

But when we place these barriers up, we insulate
ourselves from those potential gains, and we make ourselves poorer in doing that.

Whose Tariffs Are Worse For The American Consumer?

Welcome to the official YouTube channel for CNBC. From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

For real-time news updates from around the world, visit: http://www.cnbc.com

For CNBC's primetime TV lineup, visit http://tv.cnbc.com

For CNBC's International YouTube channel, visit: http://www.youtube.com/cnbcinternational