The contrast in energy between Tuesday night’s Trump-Harris sparring match and the election cycle’s first debate could not have been starker.
The opponents squared off on stage at the National Constitution Center in Philadelphia, with former prosecutor and Vice President Kamala Harris taking Republican nominee Donald Trump to task for his criminal misdeeds, his involvement in (and disavowal of) the ultra-conservative Project 2025 plan, and his suitability for office.
Trump aimed to deflect the blows but was repeatedly thrown off course, meandering into non-sequiturs about rally sizes, misinformation about abortion, and alarming accusations against immigrants.
“This was not a debate about the economy,” he added. “We did not have substantive discussions of the key economic issues, including if the White House should play a role in setting interest rates or how tariffs may impact inflation and economic growth”—a fact he found “disappointing” as it is “one of the biggest differences between Trump and Harris.”
While neither candidate illuminated clear plans with regard to these issues, it was nonetheless notable that tariffs on foreign goods—an issue that has dominated discussions in corporate boardrooms but rarely at kitchen tables—became the star of the show. The word was invoked 14 times by the candidates and ABC News moderators, David Muir and Linsey Davis.
“My opponent has a plan that I call the Trump sales tax, which would be a 20-percent tax on everyday goods that you rely on to get through the month,” Harris said during her opening statement. “Economists have said that Trump’s sales tax would actually result for middle-class families in about $4,000 more a year because of his policies and his ideas about what should be the backs of middle-class people paying for tax cuts for billionaires.”
Trump has said the tariff revenue would help offset substantive tax cuts he plans to implement if elected. But the plan has drawn criticism from economists and pundits on both sides of the aisle, who say that taxes on foreign imports will end up trickling down to the consumer and prompting potential retaliatory tariffs from trade partners.
Trump’s platform also calls for raising tariffs on China-made imports to up to 60 percent—an expansion of the Section 301 duties he imposed during his first term in office.
“We’re doing tariffs on other countries. Other countries are going to finally, after 75 years, pay us back for all that we’ve done for the world—and the tariff will be substantial in some cases,” Trump said Tuesday night. “I took in billions and billions of dollars, as you know, from China. In fact, they never took the tariff off because it was so much money, they can’t.”
The Biden Administration has indeed retained the Trump-era China tariffs—and is in the midst of reviewing a plan that would impose new, steep duties on Chinese industrial products like electric vehicles, batteries and ship-to-shore cranes after deferring implementation this summer.
Harris did not lay out her own new tariff strategy, and said little to suggest that it would deviate from the current administration’s. She did, however, blame Trump for the deepening of tensions with China and perhaps other trade partners, which she intimated has hurt American businesses.
“Well, let’s be clear that the Trump administration resulted in a trade deficit, one of the highest we’ve ever seen in the history of America,” she said. “He invited trade wars.” The U.S. Department of Commerce reported that in 2018, America’s overall trade deficit reached a 10-year high of $621 billion.
“Last night’s debate showed us that neither candidate is willing to recognize the massive burden footwear tariffs put on hard-working Americans,” Footwear Distributors and Retailers of America (FDRA) president and CEO Matt Priest told Sourcing Journal. “One candidate wants more tariffs, while the other hasn’t offered any specifics about her tariff policy.”
“With inflation already eating into Americans’ budgets, now is the time to recognize shoe tariffs are nothing more than consumer taxes,” he added.
“Donald Trump has no plan for you. And when you look at his economic plan, it’s all about tax breaks for the richest people,” Harris said on the debate stage. “His plan is to do what he has done before, which is to provide a tax cut for billionaires and big corporations, which will result in $5 trillion to America’s deficit.”
“I am offering what I describe as an opportunity economy, and the best economists in our country, if not the world, have reviewed our relative plans for the future of America,” she said, pointing to last week’s analysis from Goldman Sachs and recent reporting from the Wharton School of Business. Trump’s plan “would increase inflation and by the middle of next year would invite a recession,” she said.
“Everybody knows what I’m going to do. Cut taxes very substantially. And create a great economy like I did before,” Trump countered.
Wharton analysis of the former president’s plan to permanently extend the individual income tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA) showed the action would add $3.4 trillion to deficits, before interest costs, over the next decade. “Restoring the original TCJA regime for taxing business investment adds another $623 billion to increase the total cost of TCJA extension to more than $4 trillion,” analysts wrote in August.
What’s more, “the additional cost of lowering the corporate tax rate to 15 percent is $595 billion over 10 years,” the group added.
By contrast, Harris has said she’d stick with President Biden’s commitment not to raise taxes on those earning less than $400,000 a year. When the TCJA expires at the end of 2025, she would allow the highest marginal income tax rate for the top 1 percent of earners, which now sits at 37 percent, to revert to a rate of 39.6 percent.
Trump’s TCJA lowered the corporate tax rate from 35 percent to 21 percent—the lowest rate in eight decades—and he plans to slash rates even further, to 15 percent, for companies producing in the U.S. Harris has proposed upping the corporate tax rate to 28 percent.
On Tuesday, Harris announced a new framework to bolster American industry. “My plan is to give a $50,000 tax deduction to start-up small businesses, knowing they are part of the backbone of America’s economy,” she said, noted that doing so would allow more Americans to “pursue their ambitions, their innovation, their ideas, their hard work.”
She also doubled down on her intention to reinstate the Child Tax Credit and the Earned Income Tax Credit—two expired elements of President Biden’s 2021 American Rescue Plan. “I intend on extending a tax cut for those families of $6,000, which is the largest child tax credit that we have given in a long time,” she said.
Just prior to Tuesday night’s presidential debate, a Goldman Sachs update indicated that Harris led Trump by 2 percentage points in national polling averages and by 5 percentage points in the swing state—currently deemed to be Georgia—that could provide the winning electoral vote. The update also noted that prediction market averages imply 49 percent odds that Harris will win in November.
While Harris surged in August, Trump appears to be making some inroads nationally. “A Republican sweep or Democratic divided government—a Harris victory and Republican control of one or both chambers of Congress—remain the most likely implied scenarios, with each around 30 percent odds,” the Goldman report said.
In other races, Montana is believed most likely to determine Senate control, while control of the House of Representatives appears narrowly divided. That means that a Democratic majority “could come down to a few seats,” the Goldman report concluded.
TD Cowen strategist Chris Krueger said that Harris is “apparently pushing for another debate,” which could be a telling sign on the perception of win or loss last night.
He noted that it was clear “Harris triggered Trump through pretty much of the entire debate.” There’s a chance the performance could move the needle, but like all else in the 2024 election cycle including Biden’s surprising step away, Krueger said “expect the unexpected.”
While not quite “unexpected,” according to Seiberg, the biggest news may have occurred after the debate ended when Taylor Swift endorsed Harris for President. “I think she is a steady-handed, gifted leader and I believe we can accomplish so much more in this country if we are led by calm and not chaos,” Swift said. While Seiberg said the endorsement may not cause much vote switching, it could boost turnout among the Swifties.
