Former US President Donald Trump announced that he would impose a 10% tariff on all products when he returns to power. There are not only concerns about a second tariff war with China and alienation from allies, but also warnings that it could trigger inflation in the United States.
According to the Wall Street Journal (WSJ) and the New York Times (NYT) on the 26th (local time), former President Trump is planning to impose a ‘universal baseline tariff’ on virtually all imported goods into the United States.
Former President Trump suggested in an interview with Fox Business last August that this tax would be set at 10%.
He also predicted a trade war at a recent rally held in Durham, NH, saying, “We will impose strong punishment on China and all other countries that abuse us.”
Although specific implementation plans or detailed items related to this have not been disclosed, it is likely that 10% will be added to the existing tariff. For example, if an import product is currently subject to a 5% tariff, then in the second term of the Trump administration, a 10% tariff will be added to it, resulting in a 15% tariff.
Former U.S. Trade Representative (USTR) Robert Lighthizer asked the NYT on this day, ‘If a 5% tax is currently levied on imported products, will the tax rate be increased to 10%? When asked, “Or will it be increased to 15%,” the answer was “the latter.”
Former Representative Lighthizer led USTR during the Trump administration and is famous as the architect of protectionist policies. He is also considered the key brain behind the Trump administration’s US-China trade war. If former President Trump returns to power, he is expected to play a key role in the economic sector.
The problem is that these additional tariffs could have a shock not only to international relations but also to the U.S. economy. The WSJ reported, “The new tariffs will increase tensions with China and anger allies, provoking retaliation.”
First, former President Trump accused China of using unfair trade practices to create the U.S. trade deficit and hinted at an all-out war with China.
He pledged to strip China of its most-favored-nation trading status, along with universal basic tariffs, and announced a four-year ban on imports of all Chinese essentials, from electronics to steel and medicine.
As China is urging a withdrawal of protectionist policies, saying, “There is no winner in a trade war or tariff war,” a conflict between the two sides is inevitable.
The internal blow to the United States cannot be ignored. Some U.S. industries will be protected from foreign competition, while others will face rising costs of imported materials. As a result, there is a high possibility that inflation will soar again, and the cost of imported materials will be incorporated into products, reducing the market competitiveness of American products.
Inu Manak, a trade policy researcher at the Council on Foreign Relations (CFR), told WSJ that “a universal 10% tariff would lead to inflation and is unlikely to be imposed across the board.”
The Tax Foundation, which studies the tax policies of governments around the world, estimates that if a 10% tariff is introduced, the tax burden on U.S. consumers and businesses will increase by $300 billion (about 389 trillion won), 500,000 jobs will be lost, and the U.S. economy will shrink by 0.5%. I looked ahead.
NYT also explained, “Tax increases are passed on to consumers in the form of increased prices,” adding, “This places a greater burden on poor people who spend a larger portion of their income on goods.”
The Trump camp’s position is that the U.S. trade deficit can be reduced by imposing tariffs, but the economist said, “This is futile, and the claim that tariffs determine the size of the trade deficit is divorced from both theory and reality.” “We have been running a trade deficit every year, and that figure has increased by almost 25% during his tenure,” he pointed out.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.