In March 2018, the day after announcing sweeping tariffs on metals imported from both U.S. allies and adversaries, President Donald J. Trump On social media Sharing one of his core economic philosophies: “Trade wars are good, and they’re easy to win.”
Trump’s presidency has seen the largest increase in U.S. tariffs since the Great Depression, with high tariffs imposed on governments of China, Canada, the European Union, Mexico, India and other countries. These countries have fought back with tariffs on U.S. soybeans, whiskey, orange juice and motorcycles. PlungePrompting Trump to send $23 billion Help farmers make up for their losses.
Now, Trump is running for president again, and he has promised to escalate the trade war. He has proposed “universal base tariffs on most foreign products,” including higher tariffs on certain countries whose currencies have devalued. In the interview, he proposed the following plan: 10% tariff Tax on most imported products 60% or more He also proposed cutting the federal income tax and relying instead on tariffs to raise revenue.
Trump once Claim to be “Tariff men” have long argued that tariffs will boost American factories, narrow the gap between U.S. imports and exports, and increase American jobs.
His first round of tariffs hit more than $400 billion worth of imports, including Chinese goods such as steel, solar panels, washing machines and smart watches, chemicals, bicycle helmets and engines. He reasoned that the import taxes would revive American manufacturing, reduce dependence on foreign goods and enable American companies to better compete with cheaper products from China and other countries.
Economists say the tariffs did reduce imports and boost U.S. factory production in some industries, including steel, semiconductors and computer equipment. But they came at a very high cost that likely offset the overall gains. Leading to price increases For American consumers and factories that rely on foreign inputs, U.S. exports fall Targeting certain products that are subject to retaliation.
Trump now plans to impose tariffs on imports 10 times higher than during his first term, an approach economists say could trigger a trade war that would push up already high prices and push the United States into recession.
David Autor, an economics professor at MIT, said the proposals “would have a huge impact on prices almost immediately.”
“I don’t think they’re going to do that,” Autor said. “It could easily trigger a recession.”
Sixteen Nobel laureates in economics wrote in a recent letter that they are “deeply concerned” about the risks a second Trump administration poses to the economy, inflation and the rule of law.
“We believe that a second Trump term would have negative consequences for the United States’ economic standing in the world and would have destabilizing effects on the U.S. domestic economy,” they wrote.
Trump and his supporters view tariffs much more positively, arguing that they can be used as a bargaining chip with foreign governments to reduce Trade deficit with China and leads to U.S. Manufacturing Employment.
“I happen to be a big believer in tariffs because I think tariffs do two things for you: They benefit you economically, and they benefit you politically,” Trump said. Recent Podcasts.
“The American people don’t need a worthless, out-of-touch Nobel Prize winner telling them which president brought them more money,” Carolyn Levitt, national press secretary for the Trump campaign, said in a statement.
“President Trump built the strongest economy in American history. In just three years, Joe Biden’s runaway spending has created the worst inflation crisis in generations,” she said.
Jamieson L. Greer, a partner in the international trade group at the law firm King & Spalding who worked on trade negotiations with China during the Trump administration, said the view among Trump administration officials is that tariffs “can help support U.S. manufacturing jobs, particularly to the extent they correct unfair trade practices.”
China has a long history of pursuing policies that disadvantage American workers, but other countries also have unfair trade and tax policies or misplaced monetary policies, Greer said.
“If you level the playing field, then Americans don’t have to compete unfairly,” he said.
Trump’s tariff policy has gained support among the domestic benefiting industries. Maintaining Trump’s tariffs on China He also put forward some of his own proposals, including in the fields of electric vehicles, steel and semiconductors.
But some industries hardest hit by Trump’s trade war aren’t expecting follow-through. Executives in sectors such as retail and spirits worry that a new round of tariffs could reignite tensions, raise costs and once again close off key markets overseas.
U.S. spirits exports to Europe fell 20% after the European Union imposed a 25% retaliatory tariff on American whiskey in response to the Trump administration’s tariffs on steel and aluminum. And tariffs on China have increased the prices retailers must pay for their products, forcing them to either raise prices or cut profits.
“We need a trade policy that goes beyond adding tariffs,” said David French, executive vice president of government relations at the National Retail Federation. His organization, which represents department stores, e-commerce sites and grocers, launched a television ad campaign against Trump’s tariffs in 2018. “All they’ve done is added friction to the supply chain and cost consumers $220 billion.”
“Former President Trump viewed trade as some kind of zero-sum game — if you win, I lose, and vice versa,” French said. “That’s really not how trade works.”
The boost or hindrance effect of tariffs on exports is evident in the sectors that ultimately received a reprieve. In 2021, whiskey tariffs were temporarily suspended as part of a deal the Biden administration reached with the European Union. U.S. whiskey exports to the EU rose from $439 million in 2021 to $705 million last year.
Chris Swanger, CEO of the Distilled Spirits Council of the United States, said he hoped Trump, if re-elected, would realize that strong exports of U.S. spirits would help achieve his goal of reducing the trade deficit. The lobbying group wants the EU to extend a tariff suspension that expires next March.
“With President Trump, we obviously appreciate and respect his efforts to reduce the trade deficit,” said Mr. Swonger, who has made his case to Trump campaign officials. “Imposing tariffs on distilled spirits would be the opposite of reducing the trade deficit.”
The study showed that tariffs did achieve their goal of increasing domestic production in the industries they protected, but they imposed other costs on the U.S. economy.
A nonpartisan government study It found that tariffs on foreign steel and aluminum led to a $2.2 billion increase in U.S. production of those metals in 2021. But U.S. factories that use steel and aluminum to make other products, such as cars, tin cans and appliances, had to pay higher costs for the materials, which led to a $3.5 billion decrease in output at those factories in the same year.
Research shows that tariffs have mixed effects on employment. In a recent paper, Autor and other economists found that the cumulative effect of Trump’s trade policies and retaliation from other countries Slightly negative impact on US employmentOr better yet, wash it.
As far as inflation is concerned, Research estimates Tariffs resulted in higher prices for American families—from a few hundred dollars to more than $1,000 per year.
But economists say consumers may not be linking the higher prices they pay to the tariffs, given that inflation has been low and the economy has been strong during Trump’s term.
While the economy remains strong, prices have soared since 2021 and inflation has remained high. This may make the price increases caused by tariffs this time more obvious and more painful.
Recent Analysis The Peterson Institute for International Economics study found that if Trump does impose a 10% tariff on all goods and a 60% tariff on Chinese goods, middle-income households would spend about $1,700 more per year.
Another analysis, by the right-wing group American Action Forum, estimated that a 10% tariff could cost each American household up to $2,350 extra per year. A 60% tariff on Chinese products would cost American households an additional $1,950 per year.
The burden of these tariffs will fall more heavily on poorer households because they spend a larger share of their income on everyday items.
This could ultimately work against Trump, given that concerns about inflation are a top issue among voters.
While waiting in line for a Trump rally in Philadelphia on Saturday, Paul Rozick, an electrical warehouse manager from Bensalem, Pa., said rising grocery and gas prices have outstripped his pay raise.
“Inflation is up 20 percent, but our wages are only up 2 percent,” Mr. Rozic said. “I have less money in the bank because I spend more when I go out.”
