'Collateral damage': Former GOP finance chair warns Trump tariffs would be a disaster

Former House Financial Services Chair Jeb Hensarling (R-TX) has a stark warning for President-elect Donald Trump and the GOP Congress in the Wall Street Journal: tariffs are not going to balance the budget.

Hensarling, who now works for the libertarian Cato Institute and advises the Koch Brothers' advocacy group Americans for Prosperity, helped to pass Trump's massive tax cut package when he served in Congress, and stands by the accomplishment.

He now wants the GOP to double down on cutting both taxes and spending, he wrote in the article.

"After all other possibilities are explored and exhausted, Congress will need to reduce tax expenditures significantly," he wrote. "One possible offset that shouldn’t be embraced is Mr. Trump’s universal tariff plan. Yes, if levied at 10%, universal tariffs could theoretically raise $2 trillion over 10 years, according to the Tax Foundation. But the actual number would be much smaller, since the estimate doesn’t account for retaliatory tariffs, inflationary effects, the harm to gross domestic product, or the inevitable litigation that could prevent Mr. Trump from imposing the tariff in the first place."

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"Given the likely collateral damage, Congress would have to think long and hard before codifying these tariffs," he wrote.

Trump has vowed to enact massive tariffs across the board, particularly strong ones on China, Canada and Mexico. Already, the tariff threats have helped set off turmoil in Canadian politics and drawn urgent warnings from economists that the policy could set off large price increases for retail goods and energy.

This is not the first time that Hensarling, who headed up a super PAC for former Vice President Mike Pence over Trump early in the 2024 presidential primary, has warned against Trump's economic isolationism. In 2022, he penned another critique of Trump's record on trade for the Wall Street Journal, where he wrote, "After being the party of free trade for almost four decades, some Republicans need a refresher course on the dangers of protectionism."