Janet Yellen says Trump tariffs will 'make life unaffordable'

The Biden administration is pushing back against former President Trump's plan to replace income taxes with tariffs. Meanwhile, US Treasury Secretary Janet Yellen has warned that the tariffs could make life even more unaffordable for American consumers.

Yahoo Finance's Rick Newman reports more on the differences between Biden and Trump's tariff agendas and how they may impact consumers' cost of living..

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

With the Biden administration pushing back against President Trump's plan to replace income taxes with tariffs.

And now speaking on ABC S this week, Treasury Secretary Janet Yellen warning that the tariffs could make life unaffordable for more.

We want to bring in our very own, Rick Newman and Rick to no surprise Treasury Secretary Janet Yellen here pushing back and taking issue with this idea.

Right.

Let's just review what Trump's idea is, he has floated the idea of completely getting rid of the individual income tax and instead trying to replace all that lost revenue with taxes from tariffs on imports.

Uh I mean, it's a, it, it's worse than a terrible idea.

It's a completely unworkable idea and I don't think Trump would even try to do it if he uh got into office for a second term, but he's uh he's doing what he normally does.

He just throws some unorthodox ideas around to see what the reaction might be.

And we do know that Trump is very serious about raising tariffs on imports, uh even if he doesn't try this replacement scheme.

So just to remind people, um Trump says that if he's elected, he will uh he would like to raise the tariff on all Chinese imports, everything that comes here from China by 66 0%.

And that he would like to put a new 10% tariff on every import from every place else.

Um When you put tariffs on imports, that is a tax paid by the American companies that import those products and they will try to pass the entire cost of those tariffs on to consumers.

That is what has happened before with Trump's tariffs.

Uh Now, Trump did not impose tariffs as seriously when he was president as he promised while running for uh for, for office in 2016.

Uh what he did in 2018 and 2019 was a lot less severe than what he said he was due.

So I think we should get used to that pattern.

Uh So if Trump does win a second term, he may not impose the tariffs that uh that he says he will.

But there's an important difference between now and 2018, 2019, which is inflation is a problem right now.

And anything that pushes prices up rather than down is going to be very unwelcome.

So uh unless you have a really important reason to raise tariffs now is not the time to do that.

So, Rick, how is this potential policy playing with the electorate?

Who knows?

I mean, uh iiii I think um one of the conundrums for politicians and serious policy people and economists is that uh voters just don't seem to be paying attention to the details of these policy ideas.

I mean, this is, you know, who do you, who do you hate the least?

Is it what, what, what a lot of voters seem to be thinking about?

I mean, the president, presidential elections are always a popularity contest to some extent.

Uh It seems to be getting uh pretty uh out of hand this year and it's instead of being a popularity contest, it's like an unpopularity contest.

Who do you hate the least?

Um We will see, uh you know, it's still the election is still far off for most voters.

Most, most voters are not paying much attention at this point.

We're going to have one debate coming up in a couple of weeks.

We're going to have another debate in September that will concentrate voters' minds and we'll see if people start paying more attention to actual policies rather than personalities as they start to get more of these details.

We will see only time is going to tell Rick Newman.

Great stuff.

Thanks so much.

Bye guys.