Trump’s China tariffs will undermine the effects of his biggest achievement

  • The Trump administration is imposing tariffs on Chinese imports as the result of an investigation into the Chinese government's intellectual property theft and the improper transfer of American technology to Chinese companies.
  • It's a problem the president is right to address.
  • But tariffs are the wrong way to go and will eliminate the benefits of the GOP tax cuts.
A man cycles past a container ship operated by China Shipping Container Lines.
Krisztian Bocsi | Bloomberg | Getty Images
A man cycles past a container ship operated by China Shipping Container Lines.

In the coming weeks, the Trump administration is set to levy a reported $60 billion in tariffs on Chinese imports coming into the United States.

The Section 301 tariffs would be levied as the result of an investigation by the United States Trade Office (USTR) into the Chinese government's intellectual property theft and the improper transfer of American technology to Chinese companies.

Few people doubt this happens. It's been a problem for decades. And, the president is right to try to do something about it.

But, imposing tariffs on Chinese goods is likely to hit the electronics and telecom markets particularly hard. This will affect all consumers and hurt middle and low-income Americans the most.

Earlier this year, the Trump administration announced tariffs on imported washing machines. It didn't take long for companies that sell washing machines to announce higher prices.

Goldman Sachs estimated the cost of washing machines will go up by as much as 20 percent. Yikes. That's a significant amount of money for most Americans. When the cost of major appliance like a washing machine goes up, the result is that some percentage of consumers will buy lesser models or delay a new purchase.

Broader tariffs will affect many more industries, and this will ripple through the economy. Americans will buy fewer big ticket items. Companies will sell less and eventually need fewer workers.

President Trump deserves some credit for following through on his campaign promises, but this approach will hurt the economy. It's going to prove to be politically costly too.

The Trump tax cuts gave most Americans more money to spend. Tariffs on Chinese imports will raise prices on everyone and affect those with middle and lower incomes the most. By the time American voters show up to the ballot box this November, whatever benefit derived from tax relief is likely to long be forgotten by higher costs on important goods. In this way, Trump risks drowning out his greatest achievement.

The president loves a good bogeyman and to a large extent, American voters do too. It's one of the reasons many voters love Trump. He says what they are thinking. The Chinese government makes a pretty good foil as it is widely understood that they have been stealing American IP for decades.

But, public opinion research also shows Trump supporters and Americans generally are incredibly price sensitive. When they see the price tag jump by a double-digit percentage, they won't think tariffs are such a good idea. And, they will have long forgotten about that tax decrease.

Commentary by Sara Taylor Fagen, a partner at DDC Advocacy and a former political director for President George W. Bush. Follow her on Twitter @sarafagen2.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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