President-elect Donald Trump’s announcement Monday to impose tough tariffs on the United States’ closest trading partners will run counter to his promise to lower consumer prices, congressional Democrats and economists warn.
In couple With posts on Monday evening on his social media platform Truth Social, Trump said on his first day in office that he would impose a 25% tariff on all imports from Canada and Mexico and a 10% tariff on goods from China until those countries stop the flow of illegal goods, drugs and migrants to the USA
“Thousands of people are pouring through Mexico and Canada, driving crime and drugs to unprecedented levels,” Trump wrote. “On January 20, as one of my many first executive orders, I will sign all necessary documents to impose a 25% tariff on Mexico and Canada on ALL products entering the United States and its absurd open borders. This tariff will remain in effect until drugs, especially fentanyl, and all illegal aliens stop this invasion of our country!”
While Trump hasn’t always followed through on threats of stiff tariffs – raising questions about how tough the next round will actually be – the executive branch has wide latitude to levy taxes on foreign goods without congressional approval, meaning Trump is likely to take acting in some way.
“We’re going to get several tariff threats via rage posts over the next four years,” Brendan Duke, senior director of economic policy at the liberal Center for American Progress, said in an interview. “It is unclear exactly at what levels and in which countries he will prosecute.”
What about inflation?
The tariffs are consistent with Trump’s preference for protectionist trade policies, but they could actively hurt an area that was key to his election victory over Democratic Vice President Kamala Harris this month: taming inflation.
An analysis by the Center for American Progress shows that the tariffs announced by Trump on Monday will raise annual costs for the average U.S. family by $1,300.
Democratic members of the House Ways and Means Committee, which oversees tax and trade policy, estimate that Trump’s preferred tariffs would raise consumer costs by as much as $4,000 a year.
According to a CBS News exit poll, 78% of voters said inflation was a moderate or severe concern. Trump won voters who rated the economy as bad by 40 points over Harris.
Cars, efficiency and energy will suffer the most
Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, an economics research center, says about 15% of the goods consumed in the United States are imported.
Adding blanket tariffs on these imports would raise consumers’ overall costs of living, even without taking into account the associated economic consequences.
“You’ve added to inflation by assuming that U.S. producers of similar products won’t raise prices,” he said. “But experience shows that if the economy is strong, that’s exactly what they will do.”
Hufbauer said the U.S. auto sector, which is highly integrated with Mexico and Canada and where parts of a single vehicle are produced in all three countries, could see “pretty surprising” price increases.
Additionally, the United States imports Mexican fruits and vegetables and Canadian crude oil, complicating Trump’s pledge to lower prices, especially for groceries and gas, Duke said.
“Americans are clearly frustrated with the costs of food and gasoline,” he said. “Some parts of the United States are highly dependent on Canadian oil, even though we are a net exporter… So you can expect prices to increase, especially in places like the Midwest that are highly dependent on Canadian oil.”
Duke said tariffs on Chinese goods would raise the cost of electronics, clothing and other consumer goods.
Democratic legislation
Ways and Means Democrats, led by Suzanne DelBene of Washington and Don Beyer of Virginia, joined by Earl Blumenauer of Oregon, Terri Sewell of Alabama, Steven Horsford of Nevada, Dan Kildee of Michigan and four others, introduced the bill on Tuesday aimed at stopping the director’s ability to impose tariffs, citing additional costs for American families.
“The American people have clearly and consistently stated that costs are one of their main concerns,” DelBene said in a statement. “Estimates show that imposing huge tariffs on imported goods would raise the price of consumer products by thousands of dollars a year. “Sweeping tariffs would not only raise costs at home and likely push our economy into recession, but they would harm our trade relationships with allies and likely lead to significant retaliation, harming American workers, farmers and businesses.”
Democrats say Trump’s promises of dramatic tariffs go beyond the intent of the law that gave the president the power to impose tariffs. Congress wanted the president to be able to quickly impose tariffs on hostile foreign countries, but he had no intention of “allowing the president to impose tariffs indiscriminately without congressional approval.”
Tariffs can be an crucial foreign policy tool, but the scope Trump is proposing is 10 to 20 times greater than what he achieved even in his first term, Duke said.
He cautioned that the final form of the recent tariffs may not be exactly what Trump proposed on Monday evening, although they could be similar.
“He will do something about tariffs. I don’t know what. “It’s probably not the exact levels in these particular countries,” he said. – But it rhymes with it.
Last updated at 17:56, November 26, 2024
