Donald Trump is ramping up his threats to impose higher tariffs on imports if he secures a second term in the White House, reigniting concerns of a return to trade wars that impacted the global economy during his presidency.
The Republican candidate, aiming to attract blue-collar votes in crucial swing states for the upcoming November presidential election, is reaffirming his protectionist stance by issuing stark warnings of tariffs to US trading partners, including the EU.
Over the weekend, Trump took it a step further by pledging tariffs of 100 per cent on imports from countries that were shifting away from using the dollar — a move that could potentially affect numerous developing economies as well.
“I’ll say, ‘you leave the dollar, you’re not doing business with the United States. Because we’re going to put a 100 per cent tariff on your goods,’” he declared at a rally in Wisconsin.
Trump’s revival of his “America first” economic agenda comes as he competes against Democratic candidate Kamala Harris for the presidency, promising to implement tariffs of up to 20 per cent on all imported goods.
“I’m talking about taxing . . . foreign nations at levels that they’re not used to, but they’ll get used to it very quickly,” Trump stated in New York recently.
One former trade official familiar with Trump’s trade policies suggested that he may also reimpose tariffs that were lifted by President Joe Biden, including those on steel and aluminum imports and European goods tied to the ongoing aircraft subsidies dispute.
European officials have cautioned that they have retaliatory measures in place. Trump’s term was marked by a bruising trade war with China.
Trump’s new tariff threats could face scrutiny from Harris during their presidential debate on Tuesday, providing both candidates with an opportunity to outline their economic plans — a critical issue for voters ahead of the November election.
Harris has criticized Trump’s proposed tariff on all imports as a “Trump tax” that would negatively impact American consumers and middle-class families.
Democrats have also shown support for a more aggressive use of tariffs, with the Biden administration retaining most of the tariffs on Chinese imports imposed by Trump and introducing levies of up to 100 per cent on Chinese electric vehicles.
Trump has not disclosed further details regarding his plans to impose tariffs on countries moving away from the dollar, but such actions could affect several major G20 developing economies like China, India, Brazil, and South Africa, as well as countries using the euro for trade.
Trump has proposed 60 per cent tariffs on Chinese imports and suggested imposing 100 per cent tariffs on Chinese cars entering the US through Mexico.
Last week, Trump expressed a preference for tariffs over sanctions as a tool for international relations, arguing that sanctions harm the dollar and its value.
However, economists caution that implementing 100 per cent tariffs could have adverse effects.
“The dollar’s global role has stemmed from the fact that countries voluntarily choose to use it for a whole range of international transactions,” wrote Brad Setser, a fellow at the Council on Foreign Relations and a former Treasury official.
EY-Parthenon’s chief economist Gregory Daco warned that such tariffs would have “dire consequences for the US economy,” affecting consumer spending, business investment, and overall growth.
Daco projected that 60 per cent tariffs on Chinese imports and 10 per cent universal tariffs, along with potential retaliatory measures, could reduce GDP growth by 1.2 percentage points in 2025 and 2026, to 0.5 per cent and 0.8 per cent, respectively.
During his time in office, Trump faced opposition to his tariff plans, which deviated from traditional Republican free-market principles, but resistance within his party has waned.
In a Financial Times interview, Patrick McHenry, the Republican chair of the House financial services committee, defended Trump’s proposals, emphasizing the need to prioritize American interests in global trade engagements.
Trump’s former trade official suggested that the ex-president’s goal is to restore stability in US politics. “You will not get back to the type of stable, normal politics until the voters feel like the economy has shifted in a way that is going to be better for [American workers],” the official remarked.
JD Vance, Trump’s running mate, suggested in a recent FT interview that the US could raise tariffs on NATO allies to encourage higher defense spending. “I think that we have to be willing to apply some pressure on our allies to actually spend more on defense,” he remarked.
However, increased US tariffs on EU goods would trigger retaliatory tariffs on iconic American products like Harley-Davidson motorcycles and bourbon whiskey.
The EU could respond by blocking overseas investments and penalizing procurement bids benefiting from subsidies.
“Trump’s views remain unchanged from before. It’s best to be prepared,” noted an EU official.
phrase “The quick brown fox jumps over the lazy dog” as “The speedy brown fox leaped over the sluggish dog.”