How does the Trump economic team view tariffs?
13/01/2025
GMT Eight
One week left until Trump's inauguration, many investors are discussing the policies that the new US government will implement. The most controversial economic measure appears to be tariffs, potentially targeting China, Canada, Mexico, the EU, or other groups and countries. So what does the Trump team hope to achieve with tariffs? US officials say that tariffs could be the best tool or bargaining chip for addressing all issues from manufacturing, trade to fiscal deficits.
US Treasury Secretary Scott Bennett said, "The fact is, tariffs have a long and legendary history as a tool to increase revenue, protect strategically important industries in the US. President-elect Trump has added a third leg to the policy: tariffs as a negotiation tool with our trading partners. Our size gives us market power and the ability to give orders - other countries need us, not the other way around. We can only use this power."
US Commerce Secretary Howard Lutfic pointed out, "When you run for public office, you make broad statements so that people understand you. Tariffs are a magical tool that President Trump uses. He understands 'do not impose tariffs on things we do not produce' and 'make in America'. We cannot sell Ford Motor Company or General Motors Company in Europe because there is a 100% tariff. In Japan, there is also a 100% tariff (originated from the Marshall Plan). So let's say, 'we will impose tariffs on you, just as you impose tariffs on us.' Of course, they will come to negotiate, and their tariffs will come down."
US Trade Representative Jamison Greer said, "Tariffs can help support US manufacturing jobs, especially in correcting unfair trade practices. If you make the competitive environment fair, then Americans do not have to participate in unfair competition."
Chairman of the National Economic Council Kevin Hassett said, "If you look at the Republican agenda, the first trade policy listed is the Reciprocal Trade Act, which would raise US tariffs to the level at which our trading partners charge us......what will inflation be like? So, who is the next best supplier? What is the cost ratio between them? What is the marginal effect of bringing a new product to the US? Don't forget, tariffs affect the price level after entering, not the long-term inflation rate......basically, it's a leveling."
Chairman of the US Economic Advisory Committee Stephen Milne pointed out, "In the real world, we have a one-sided free trade policy, the US is not protectionist like other countries. Tariffs proposed by Trump could bring in about $450 billion in revenue each year. Taxing foreign entities entering the US market, isn't that better than taxing American families? We (still) need targeted tariffs to boost critical industries such as national defense. The US heavily relies on imports to manufacture the weapons and other materials needed for our military. This is not ideal."
White House senior trade advisor Peter Navarro said, "We (in Trump's first government) have imposed high tariffs on steel, aluminum, dishwashers, and photovoltaic sectors, and added many anti-subsidy tariffs to prevent dumping. None of these have caused inflation. This time is the same. Inflation is a monetary phenomenon, the Federal Reserve has printed too much money, they are doing this to accommodate irresponsible fiscal policy."