Trump and Harris clashed over tariffs during the debate. Here’s how they’ll affect your wallet.

Tariffs are charges placed on goods imported from other countries. But how effective are they, and at what point do they start to harm the economy?

The question now lies at the heart of the opposing positions of America’s two presidential candidates. While Vice President Kamala Harris is proposing a mix of tax breaks for America’s middle class and higher taxes on wealthier people to boost growth and reduce the deficit, former President Donald Trump is proposing something more novel: using massive tariffs to both protect American industry and raise revenues.

During Tuesday night’s presidential debate, Trump reiterated his commitment to his plan, which calls for a 10% tariff on all imported goods and a 60% tariff on goods imported from China.

“Other countries are finally going to pay us back, after 75 years, for everything we’ve done for the world, and the tariff is going to be substantial,” Trump, the Republican nominee, said, adding that his proposed 10% across-the-board tariff would raise “hundreds of billions of dollars.”

Harris, the Democratic candidate, responded that tariffs are effectively a “sales tax” on American households.

In fact, the Biden administration recently imposed its own set of tariffs, while extending tariffs first imposed during the Trump administration. Harris hasn’t explicitly said whether she would extend them, but on her campaign website she said she would continue to support “American leadership in semiconductors, clean energy, AI and other advanced industries of the future” while addressing “unfair trade practices by China or any competitor that undercut American workers.”

The tariff battle, while perhaps fractious, is crucial to understanding the candidates’ economic visions. And that’s not to mention the ways in which third parties have assessed each plan’s potential.

The pro-business Tax Foundation estimates that, under the most optimistic scenario, Trump’s tariffs would raise as much as $2.5 trillion over 10 years. But the group calculates that those revenues would cover barely half of the tax breaks and spending proposals that Trump has also outlined.

Meanwhile, most of Harris’ economic plan projections show a more balanced outcome between higher U.S. revenues, tax breaks and spending plans.

Tariffs are ultimately a matter of trade-offs. There is never a line item on a big-box store receipt for the cost of tariffs, but many economists believe that consumers ultimately pay higher prices when tariffs are imposed because the companies that pay the tariffs up front eventually pass the cost on.

But tariffs can also support and even grow US jobs.

Take the Trump administration’s 2018 tariffs on washing machines. According to the Coalition for a Prosperous America, a bipartisan group that advocates for stricter foreign trade rules, the tariffs on washing machines created more than 2,000 jobs and spurred growth in two southern U.S. communities where Korean appliance makers eventually built factories to avoid the tariffs.

However, a scientific paper found that the cost of these jobs amounts to approximately $815,000 per position, while washing machine prices have increased by as much as 10%.

The washing machine tariffs were part of a broad new tariff regime imposed by Trump in an attempt to protect American workers from anti-competitive Chinese trade practices. It resulted in what is widely seen as a “trade war” with retaliatory tariffs imposed on American goods.

The ‘war’ subsided somewhat in the aftermath of the pandemic.

But when the Biden administration embraced its own set of tariff policies this spring, some of them were a continuation of those imposed by Trump. In May, for example, Biden announced a new round of tariffs on a wide range of goods, including steel and aluminum, as well as semiconductors, electric vehicles, batteries and solar panel components.

The White House offered similar reasoning to the Trump administration when it announced the tariffs.

“American workers and companies can outperform anyone — as long as there is fair competition,” Biden said in a press release. “But the Chinese government has used unfair, non-market practices for too long.”

Most economists agree that tariffs can support domestic industries. But they can also lead to higher costs for the economy as a whole.

In a 2018 interview with the pro-business American Enterprise Institute, Douglas Irwin, one of America’s foremost trade historians, articulated this dilemma.

“There’s no denying that certain workers in certain sectors have been negatively impacted as a result of” increased foreign competition, he said, “but when you talk about the productivity improvements that come from trade, the jobs created by exports and the benefits to consumers, I would say that on balance America is better off.”

“But,” Irwin continued, “you can’t deny that certain groups are potentially worse off as a result” of the lack of protection.

Assessing the economic impact of tariffs often depends on assumptions and calculations that can produce widely varying results. The Committee for a Responsible Federal Budget, a nonpartisan group, wrote that Trump’s 60% tariff proposal on China “would generate about $300 billion in net revenue over a decade or lose about $50 billion … depending on what share of Chinese imports are replaced by domestic versus foreign goods.”

The committee said the revenue-raising aspect of Trump’s proposal, which amounts to $2.5 trillion over 10 years, “would have a significant fiscal impact and significantly slow the growth of the national debt.”

But the group added that it could have “substantial economic effects”, such as lower purchasing power and greater uncertainty for businesses.

Free trade advocates favor negotiating terms directly with other countries, but even then, countries with which the U.S. has friendly agreements are accused of violating such deals. Mexico has been criticized for allegedly violating a joint steel agreement that Trump signed in 2019, leading to closures of U.S. steel plants in places including Ohio, New York and, most recently, Chicago’s Southwest Side.

“Ohio steelworkers can no longer wait for Mexican fraud to stop,” Sen. Sherrod Brown, D-Ohio, said in a joint statement with Sen. Tom Cotton, R-Ark., in March. “Workers are losing their jobs and Ohio companies are losing business now. When Mexico breaks the rules they agreed to, the government must hold them accountable.”

Officials at the companies behind the plant closures have cited U.S. inflationary pressures as a reason for the closures. The battle over the future of U.S. Steel, whose plan to be acquired by a Japanese conglomerate now risks being blocked by the Biden administration, is also tied to broader economic forces that have long destabilized U.S. manufacturing.

Nick Iacovella, senior vice president for public affairs at the Coalition for a Prosperous America, a trade association that advocates for tariffs, said opposition to tariffs often wrongly assumes that domestic manufacturing cannot be improved.

He said special interest groups often like to push reports showing that tariffs don’t work as a means to justify the fact that “over the last two or three decades, manufacturing and jobs have been moving to countries where labor is cheaper and environmental standards are lower.”

“There are many working-class Americans who have been harmed by offshore manufacturing and unfair and illegal trade activities from China,” Iacovella said. “Our communities are being hollowed out, including as a result of free trade agreements.”

But for every job protected by tariffs, there is often another domestic industry that could end up losing jobs. According to economists at Harvard University and the University of California, Davis, Trump’s steel tariffs ultimately hurt companies that use steel as an “input” to produce finished products, such as auto and appliance manufacturers.

“The job losses resulting from the imposition of these steel-processing industries appear to be substantial and far greater than the jobs that may have been created in the steel manufacturing sector as a result of the tariffs,” they wrote in a 2020 report.