Trump plans sweeping tariffs, targets China in trade overhaul
Donald Trump is preparing to implement the most extensive tariffs in a century, and some of these tariffs are intended to serve as bargaining chips in trade negotiations, writes "The Washington Post." The newspaper adds that the introduction of a universal basic tariff is unlikely.
"Trump wants to use high tariffs to rebalance global trade to favour domestic manufacturing and to raise additional government revenue that could help reduce income taxes or pay for other programs," explains the "WP."
The President-elect announced a 60% tariff on imports from China and 10-20% on all other foreign products.
Trump in the White House: Will there be a tariff increase?
According to several trade lawyers consulted by the American newspaper, Trump’s first trade decisions will likely target China. "Trump’s first trade action will probably target China, since he could rely on existing legal authority stemming from a 2018 investigation of Chinese trade practices," notes the "WP."
However, "his ability to impose universal tariffs is less certain," the newspaper adds.
Michael Feroli, chief economist at JPMorgan in the USA, states in his analysis that "procedural reasons" will likely hinder the introduction of a universal tariff, but actions against Chinese products may occur much sooner.
"The threat of tariffs is used as a tool, as part of an arsenal of incentivizing domestic investment and production and less like an independent policy to be implemented on day one," observes Bob Elliott, CEO of Unlimited Funds.
Economists warn
Economists warn that tariffs, combined with Trump's plans for mass deportations of illegal immigrants, will raise prices and slow down the U.S. economy. The prospect of new tariffs is already causing some managers to delay planned investments, writes the "WP."
John Veroneau, Deputy U.S. Trade Representative under President George W. Bush, emphasizes that "Congress has never given the president broad authority to impose tariffs under any conditions and for any reason he or she wishes." Therefore, in his opinion, a universal basic tariff would face significant legal challenges.
Some trade lawyers the newspaper spoke with point out that Donald Trump could justify introducing such a tariff by invoking the president's broad powers under the International Emergency Economic Powers Act, which he used several times during his first term, including against Chinese apps TikTok and WeChat.
- Alternatively, he could rely on a provision of a 1974 trade law that allows the president to impose a universal tariff of up to 15 percent for 150 days in response to a "large and serious" balance of payments deficit, claims Wendy Cutler, vice president of the Asia Society Policy Institute.
This provision has never been used before, notes the "WP."
