Professor nails how tariffs are likely to cost Americans using the washing machine tariff history.

Economics professor Justin Wolfers exposes Trump’s claims about who pays for tariffs by examining the process of tariffs on washing machines.

Professor nails how tariffs are likely to cost Americans

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Summary

The video features economist Professor Justin Wolfers using the 2018-era washing-machine tariffs to illustrate that import taxes are passed directly onto higher retail prices, enriching corporations and subsidizing millionaire tax cuts while leaving working-class families to foot the bill.

• A 20 % tariff on foreign washers—and its later jump to 50 %—lifted washer prices by about $100, a 12 % spike that matched the tariff almost dollar-for-dollar.
• Domestic manufacturers copied the price hike, proving tariffs encourage price-gouging rather than reshoring jobs.
• Federal Reserve researchers calculate that the policy costs U.S. consumers $1.5 billion annually while creating only 1,800 jobs, at a cost of roughly $800,000 per position.
• Follow-up studies confirm nearly 100 % pass-through of Trump-era tariffs to consumers, negating claims that “foreign exporters pay.”
• Trump’s 2025 tariff revival repeats the pattern: higher prices, legal uncertainty, and a hidden tax on the poor that bankrolls new billionaire-friendly tax cuts.

The episode underscores a core progressive insight: tariffs under right-wing administrations masquerade as patriotic industrial policy while operating as a regressive tax that transfers wealth upward, burdens household budgets, and deepens inequality.

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The tariff debate resurfaces every election cycle, yet the evidence remains stubbornly clear: when policymakers impose duties on imports without an accompanying industrial policy framework, consumers bear the burden and corporations pocket the difference. Professor Justin Wolfers’s walk-through of the 2018 washing-machine saga distills this reality with surgical precision. In January 2018, the Trump administration imposed a 20% safeguard tariff on imported washers, escalating it to 50% on large volumes. Within weeks, retail prices for washers—and even untariffed companion dryers—jumped roughly 12 %, mirroring the levy almost exactly.

Economists Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot later crunched the numbers for the American Economic Review: consumers hemorrhaged $1.5 billion annually, while the entire U.S. appliance sector added a mere 1,800 jobs—an astronomical $800,000 in extra consumer costs per job. That is not an employment program; it is legalized wealth extraction. The price-gouging extended beyond foreign models: Whirlpool, Maytag, and other U.S. brands raised prices in lockstep once foreign competition-plus-tariff lifted the ceiling, demonstrating that corporations exploit the cover of nationalism to widen profit margins.

Subsequent Federal Reserve analyses broaden the indictment. Researchers tracking 2018-19 trade actions find a pass-through approaching 100% across product lines, obliterating the White House narrative that “China pays the tariff.” Complementary goods, spare parts, and logistics fees all swell, compounding the damage. A recent Politifact fact-check synthesizes the academic consensus: tariffs raise prices, shrink purchasing power, and fail to spur durable manufacturing rebounds.

Fast-forward to 2025 and history threatens to rhyme. Former President Trump, again wielding Section 301 and the International Emergency Economic Powers Act, has floated sweeping 10–25 % duties on imports from China, Mexico, and Canada. Journalists at The Verge note that legal scholars question the constitutionality of such blanket tariffs, but the economic upshot is undisputed: another round of sticker shocks at Target and Home Depot, paired with corporate windfalls. Because tariffs resemble sales taxes, they hit low-income households hardest, consuming a larger share of disposable income than they do for affluent families who benefit from the very tax cuts the duties finance.

Progressives argue—and the data affirm—that there is nothing inherently wrong with protecting strategic sectors. The Roosevelt administration built the Arsenal of Democracy through public procurement, direct investment, and robust labor standards—not by sprinkling ad-hoc tariffs and hoping ultracapitalist firms would pass savings down. A modernized industrial policy would channel public funds into green manufacturing, guarantee union neutrality agreements, and set price-stability covenants that prevent domestic producers from colluding to raise prices once foreign competition is hampered. The Inflation Reduction Act offers glimpses of this approach: production tax credits tied to prevailing-wage rules and domestic-content thresholds, plus consumer rebates that blunt price spikes.

Tariffs alone, by contrast, are a blunt instrument that fails to distinguish between value-added supply-chain development and mere rent-seeking. Corporations already flush from the 2017 Tax Cuts and Jobs Act quietly harvest tariff revenue as a second subsidy. The consumer pays twice—first at the checkout line, then again when the government uses tariff receipts to offset lost revenue from billionaire tax breaks. In effect, the policy launders working-class income into shareholder dividends.

Compounding the harm, tariffs invite retaliation. During the earlier trade war, China targeted American soybeans, harming Midwestern farmers who form a critical part of the electorate. The non-partisan Congressional Research Service tallied $28 billion in emergency farm bailouts—public money spent to paper over a crisis Washington precipitated. Were the United States to escalate again, Beijing’s arsenal includes rare-earth quotas that would disrupt clean-energy supply chains. Progressive foreign-policy thinkers instead champion multilateral trade governance that sets labor, climate, and human-rights benchmarks, thereby leveling the field without igniting tit-for-tat reprisals.

The washing-machine case also debunks another myth: that tariffs automatically spawn domestic capacity. Whirlpool did announce factory expansions in Clyde, Ohio, but capital expenditures plateaued within a year as demand softened under higher prices. Meanwhile, Samsung and LG simply shifted some production to U.S. assembly plants—a shell-game relocation that kept profits overseas while extracting local tax abatements. Without binding requirements for technology transfer, environmental compliance, and profit-sharing, such moves provide headlines but few community benefits.

Progressives view trade policy through a justice lens: rules must prioritize workers, communities, and the planet before corporate balance sheets. Smart strategies include:

1. Targeted, conditional subsidies—offer public grants only when firms sign enforceable labor agreements, share intellectual property, and cap prices.
2. Active antitrust enforcement—prevent domestic cartels from mirroring tariff-induced price hikes.
3. Consumer-side rebates—shield low-income households from transitional costs as industries adjust.
4. International cooperation—negotiate climate clubs and enforceable labor accords rather than unilateral tariffs that trigger retaliation.
5. Democratic oversight—return tariff authority to Congress, ensuring public debate replaces executive fiat.

In the end, Wolfers’s lesson is simple yet profound: tariffs in a deregulatory, shareholder-first environment serve the wealthy while punishing everyone else. If policymakers genuinely wish to revive domestic manufacturing, they must pair strategic protection with robust safeguards that guarantee the gains reach workers and consumers. Otherwise, the washing-machine fiasco will not remain a cautionary tale—it will become the blueprint for the next great transfer of wealth upward.

By spotlighting concrete data and historical precedent, the progressive critique arms voters with facts: tariffs, as deployed by Trump and his allies, are less about national greatness than about engineering another upward redistribution of income. A movement committed to economic justice must therefore resist simplistic tariff rhetoric and demand comprehensive policies that build a sustainable, worker-centered economy instead.