President-elect Donald Trump, a staunch fan of tariffs, is promising impose strict import duties As soon as he is inaugurated in January. For Trump, these new levies will be both a supercharge trade policies It was pursued during his first administration and, more broadly, helped the US achieve key economic and social goals.
On his Truth Social site Monday evening, Trump revealed plans to impose a 25% tariff on all imports from Mexico and Canada. 20 January, Its inauguration day. The president-elect also said he intends to impose an additional 10% tariff on all imports from China.
Trump's penchant for protectionist trade policies is a concern for many economists and Wall Street analysts, who are worried that new tariffs and retaliatory measures by U.S. trading partners could slow economic growth, increase inflation and trigger a trade war. It is possible
But Trump and his allies, including his pick for Treasury secretary, Scott Besant, Argued that the tariffs implemented during his first term did not lead to inflation and that the upside may have outweighed any negative effects.
“But if you look at it, tariffs are two things,” Trump said. Said In an interview with Bloomberg News editor-in-chief John Micklethwait in October. “No. 1 is to protect the companies that we have here, and the new companies that will come, because we're going to have thousands of companies coming into this country.”
Here are four ways Trump says tariffs will help America, plus what experts say.
Protect American Manufacturing
Trump believes imposing tariffs on trading partners will help protect American businesses at a time when domestic manufacturing jobs have fallen far from their peak in 1979.
In some instances, tariffs imposed by Trump in 2018–19 achieved that goal, with the Brookings Institution thing worth noting There is some evidence that jobs in specific industries have been boosted. For example, according to the centrist think tank, tariffs on imported washing machines would have created 1,800 new American jobs at Whirlpool and other manufacturers.
But that ignores the broader impact of Trump's first-term tariffs on U.S. manufacturing, with the Federal Reserve Search American manufacturers faced the high cost of the raw materials they imported as well as retaliatory tariffs from other countries. The number of US manufacturing jobs declined slightly during Trump's first term, from about 12.4 million to 12.2 million workers, although several factors can account for that decline.
,[O]Your results show that tariffs did not boost manufacturing employment or output, even though they increased producer prices,” the Fed researchers noted.
Bring new companies to America
Trump also argues that broad-based tariffs would convince some foreign manufacturers to open plants in the US as a way to avoid import duties.
“The higher the tariffs, the more likely it is that the company will come to the United States and build a factory in the United States so it doesn't have to pay tariffs,” Trump told Bloomberg's Micklethwait.
Although such a change is possible, Micklethwait said such changes would take “many, many years.” (Trump disputed this, saying the companies would “come immediately.”) Experts note that many factors beyond tariffs influence where companies decide to operate, including supply chains, taxes, shipping costs and labor. and regulatory policies.
Already, some businesses are anticipating the impact of the tariffs by relocating their manufacturing locations, but this is not guaranteed to benefit the US, for example, cobbler maker Steve Madden. Said If Trump imposes new tariffs on Chinese imports, it will shift manufacturing away from China to countries like Cambodia and Vietnam.
Deliver billions in new federal revenue
Trump has also promoted tariffs as a way to generate new federal revenue that could offset his proposed tax cuts. During his first administration, his tariffs – more limited than his current proposals – generated $80 billion in revenue, According To Tax Foundation.
If Trump imposes a 10% tariff on all imports, as he proposed during his campaign, the federal government would receive $2 trillion from 2025 to 2034. Estimate Nonpartisan Tax Foundation, a think tank that focuses on tax issues.
According to Goldman Sachs, a 25% tariff on Canada and Mexico along with a 10% tax on Chinese imports would generate just under $300 billion in tariff revenue per year. Overall, 43% of US imports come from Mexico (15.4%), Canada (13.6%) and China (13.9%).
However, experts say that revenue will largely be paid for by American consumers and businesses. That's because tariffs are not paid by countries that export to the US, as Trump says, but by US importers.
In other words, companies like Walmart will face a decision whether to swallow the higher costs of imports, or pass the burden on to consumers, Vicky Redwood, senior economic adviser at Capital Economics, wrote in a research note.
“If the cost is passed on to them, customers face a choice: continue buying (now more expensive) imports or switch to buying domestic substitutes (which will cost more than imports pre-tariff),” he said.
According to an August report, Trump's tariffs could cost the typical American family an additional $2,600 per year due to importers and manufacturers passing the cost of the tariffs on to consumers. Analysis From the Peterson Institute for International Economics, a non-partisan think tank that focuses on economic issues.
Stop drug flow and illegal immigration
Trump also sees the threat of new tariffs as a way to curb illegal immigration and drug trafficking, citing people saying that “crime and drugs in Mexico and Canada are reaching levels that have never been seen before.” Never been seen.” The tariffs “will remain in place until drugs, especially fentanyl, and all illegal aliens stop this invasion of our country!” He added.
Most fentanyl is within the US smuggled from mexicoDuring President Biden's tenure, drug seizures at the border increased rose sharplyU.S. officials estimate that about 21,900 pounds (12,247 kilograms) of fentanyl was seized in the 2024 government budget year, compared with 2,545 pounds (1,154 kilograms) seized in 2019, when Trump was president.
While it's possible that Canada, Mexico and China could increase enforcement against drug trafficking or immigration to avoid Trump's tariffs, it's unclear whether such a threat would achieve those goals. Mexican President Claudia Sheinbaum suggested on Tuesday that Mexico could retaliate with tariffs of its own and called illegal drugs an American problem, signaling a willingness to discuss the issues with Trump.
“The flow of drugs into America is a public health and consumption problem in your country's society,” he said.