President-elect Donald Trump, an avowed supporter of tariffs, has promised: enact strict import duties As soon as he took office in January. For Trump, both of these new taxes would significantly increase benefits for the public. trade policy Pursued during the first administration and more broadly helps the United States achieve major economic and social goals.
On Monday night, President Trump announced on his Truth social site that he plans to impose a 25% tariff on all imports from Mexico and Canada. January 20th His inauguration day. The president-elect also said he would impose an additional 10% tariff on all imports from China.
President Trump’s trend toward protectionist trade policies is a concern for many economists and Wall Street analysts, as new tariffs and retaliatory measures by U.S. trading partners could slow economic growth. They fear it could accelerate inflation and spark a trade war.
But Trump and his allies, including his pick for Treasury Secretary, scott bessent He argues that the tariffs introduced during his first term did not boost inflation, and that the upside could far outweigh the negative.
“But if you look at it closely, tariffs are two things,” President Trump said in an interview with Bloomberg News Editor-in-Chief John Micklethwait in October. “The first thing is to protect the businesses in this country and the thousands of new businesses that will come to this country.”
Here are four ways President Trump claims tariffs will help the United States, and what experts say.
Protecting U.S. Manufacturing
President Trump believes imposing tariffs on trading partners will help protect U.S. businesses as domestic manufacturing employment has fallen sharply from its 1979 peak.
In some instances, the tariffs President Trump imposed in 2018-2019 met their goals, and the Brookings Institution says there is evidence that they may have boosted jobs in certain industries. Pointed out. For example, a centrist think tank says tariffs on imported washing machines could have created 1,800 new jobs in the United States at Whirlpool and other manufacturers.
But this ignores the broader impact of President Trump’s first round of tariffs on U.S. manufacturing, with the Federal Reserve’s decision to increase the cost of raw materials that U.S. manufacturers end up importing and revealed that it faces retaliatory tariffs. U.S. manufacturing employment declined slightly during President Trump’s first term, from about 12.4 million to 12.2 million, but this decline can be attributed to a variety of factors.
“Our results suggest that although tariffs increased producer prices, they did not boost manufacturing employment or output,” the Fed researchers wrote.
Attracting new companies to the US
President Trump has also argued that broad tariffs will persuade some foreign manufacturers to open factories in the United States as a way to avoid import duties.
“The higher the tariffs are, the more likely companies are to come to the United States and build factories in the United States so they don’t have to pay the tariffs,” Trump told Bloomberg’s Micklethwait.
Mr Micklethwait said such a change was possible, but such a change would “take many years”. (President Trump disputed this, saying companies “will be coming soon.”) Experts say many factors other than tariffs, including supply chains, taxes, transportation costs, labor and regulatory policies, etc. It is pointed out that this influences companies’ business development decisions.
Some companies are already anticipating the impact of tariffs by relocating manufacturing, but that doesn’t necessarily benefit the United States. For example, shoe manufacturer Steve Madden said If President Trump imposes new tariffs on Chinese imports, manufacturing will move from China to countries like Cambodia and Vietnam.
Delivering billions of dollars in new federal revenue
President Trump has also touted tariffs as a way to generate new federal revenue that could offset his proposed tax cuts. During his first administration, his tariffs were more limited than current proposals and generated $80 billion in revenue, according to the Tax Foundation.
The federal government would gain $2 trillion from 2025 to 2034 if it imposed a 10% tariff on all imports, as President Trump proposed during the campaign, the tax issue said. The Tax Foundation, a nonpartisan think tank, estimates that.
According to Goldman Sachs, imposing 25% tariffs on Canada and Mexico and 10% on imports from China would generate just under $300 billion in customs revenue annually. Overall, 43% of U.S. imports come from Mexico (15.4%), Canada (13.6%), and China (13.9%).
But most of that revenue will be paid for by U.S. consumers and businesses, experts say. That’s because, as President Trump insists, tariffs are paid by U.S. importers, not by countries exporting to the United States.
In other words, companies like Walmart will have to decide whether to accept higher import costs or pass them on to consumers, Vicki Redwood, senior economic advisor at Capital Economics, said in a research note. said.
“If costs are passed on, customers have the choice of continuing to buy imported products (which are currently more expensive) or switching to domestic substitutes (which are more expensive than before import duties),” he said. We will have to face it.”
An August analysis by the Peterson Institute for International Economics, a nonpartisan think tank focused on economic issues, found that President Trump’s tariffs will reduce the general The average American household could end up paying an additional $2,600 a year.
Stopping the influx of drugs and illegal immigrants
Trump also sees the threat of new tariffs as a way to curb illegal immigration and drug smuggling, saying people are “coming in from Mexico and Canada, pushing crime and drugs to unprecedented levels.” Ta. The tariffs will remain in place “until we stop drugs, especially fentanyl, and all illegal aliens from invading our country.” he added.
Most of the fentanyl is in the US smuggled from mexico. Drugs seized at border during Biden’s presidency rose sharplyU.S. authorities tallied about 21,900 pounds (12,247 kilograms) of fentanyl seized in the 2024 government budget year, compared to 2,545 pounds (1,154 kilograms) in 2019, when Trump was president. Ta.
Canada, Mexico and China may step up crackdowns on drug smuggling and immigration to avoid President Trump’s tariffs, but it is unclear whether such threats will be accompanied by such goals. Mexican President Claudia Sheinbaum on Tuesday hinted that Mexico could retaliate with its own tariffs, said illegal drugs are a U.S. problem and said she would discuss the issue with President Trump.
The flow of drugs into the United States is “a public health and consumption issue in your society,” she said.
