What happens with the money collected from the trade tariffs? Is it being used to partially offset the republican tax cut?

Recently, Trump made the absurd claim that the money raised from new import taxes will be used to pay down America's large debt. This is a ludicrous statement considering that the national debt is currently at $21.4 trillion! Tariffs generated a relatively small amount of revenue in 2017, $33.1 billion.

In addition Trump’s outlandish claim on tariffs is that he is taxing foreigners, but the reality is that tariffs are taxes on U.S. companies and consumers. After the end of World War II, US public policy has moved towards free and open trade, and reduced trade barriers. This increase in international trade has led the global community to growth in employment, production, and incomes for the countries involved.

In recent economic history the United States has been the crusade toward free and open trade; nonetheless, the U.S. applies high tariffs on selective categories of goods. Instead of focusing on trade policy to reduce commercial barriers, Trump has been quick to levy new tariffs while at the same time, intimidating trading partners of further trade restrictions if the US does not get the trade concessions it wants.

Data shows that tariffs don’t achieve their intended objectives, and instead have the inverse result in higher prices, lower employment, and slower economic growth. Smart policy makers should not erect barriers to trade but promote free trade and the economic benefits it brings. If a U.S. manufacturer has to pay 10 or 25 percent more to get steel from Canada or from China, that same company has to pay the tariff when it imports that good and the U.S. business has the choice of either absorbing the extra cost or pass it on to consumers as simple as that.

There are already signs that inflation is creeping in because the effect of Trump's tariffs. One simple example is a soft drink makers that has to raise its price because aluminum tariffs are making the aluminum can it uses more expensive.

In terms of Trump's claim that money raised from the tariffs will be used to pay down the debt is false at best. The imposition of tariffs on $85 billion worth of foreign goods so far, would raise about $21 billion, a very small percentage (0.1 percent) of the debt. On the other hand, the money raised from the tariffs does little to counterbalance all the money Trump has added to the debt with his outlandish tax cuts to the wealthy. Additionally, Trump has announced a $12 billion aid package to farmers hurt by the tariffs. This only adds spending that will further reduce the revenue coming from his imposition of tariffs. The indicators as a whole are that the Trump administration has entered a circle of unintended consequences or worse yet, just plain ineptitude and lack of understanding of proven economic principles.