Donald Trump, who has been quite vocal about his tariff-heavy trade policy, appears to have shifted the focus of his protectionist agenda from China to some of his closest US allies.
Speaking at a campaign event in Savannah, Georgia, Tuesday, the Republican presidential nominee said he would build on the tariff policy of the first term in an effort to take manufacturing jobs from foreign countries – both friends and enemies.
“You’re going to see a mass exodus of manufacturing from China to Pennsylvania, from Korea to North Carolina, from Germany to here in Georgia,” he said in a speech that mostly focused on the economy.
“I want a German car company to become an American car company, I want to build a factory here,” he said.
In his first term, Trump has imposed billions of dollars in duties on Chinese goods as part of an effort to correct what he sees as an unfair trade balance. Trump said he would consider new tariffs on imports from countries with tariffs of 60% or higher.
US allies could be the main targets of Trump’s “America First” policy which increasingly includes a group of European and Asian partners alongside rival China. The former President has proposed a blanket tariff of up to 20% that will be imposed on imported goods from all countries.
“We’ve been treated very badly, mostly by our allies … our allies treat us worse than our so-called enemies,” Trump said at a rally in Wisconsin earlier this month.
“In the military, we protect them and then they screw us in trade. We will not let it happen again. We will become a tariff country,” he added.
The comments echoed statements Trump made about Taiwan earlier this year when he accused them of taking “about 100%” of the U.S. chip business. He also said that the democratically-ruled island should pay the US for its defense.
Trump has long sought to put economic and diplomatic pressure on US allies, accusing him them from “free-riding,” and his new statements signal that he is doubling down on that approach, said Nick Marro, Lead for Global Trade at the Economist Intelligence.
Experts say Japan is also worried about what could be another “transactional” President Trump and calls for 100% tariffs on certain car imports. “What will Japanese cars be like? So there’s a lot of uncertainty here about what the next five years will look like,” writer William Pesek told CNBC’s “Squawk Box Asia” in July.
“One of the riskiest aspects of Trump’s tendency toward tariffs is that other countries will not take action. Retaliation by other US trading partners – whether through reciprocity, retaliatory tariffs, or other non-tariff measures – is a potential consequence. of all this,” said Marro.
Trump also said on Tuesday that he plans to create a “manufacturing renaissance” through the implementation of corporate tax cuts, the creation of low-tax special economic zones and tax credits for companies that move production to the US.
“The policy may attract some manufacturing back to the U.S., especially for industries that are sensitive to trade barriers,” said Stephen Weymouth, a professor of international political economy at Georgetown University.
“However, these plans are unlikely to lead to substantial industry change, given the complexity of global supply chains and higher labor costs in the US,” he said.
Economist Stephen Roach also told CNBC that Trump’s tariffs will hurt America’s trading partners while only increasing the cost of goods for American consumers and manufacturers. This is consistent with mainstream economic opinion on tariffs.
“US manufacturers that rely on foreign parts and components will get a double whammy – inputs will be more expensive because of Trump’s tariffs, and exported products will be more expensive because of retaliatory tariffs,” said William Reinsch, Scholl’s Chairman of International Business. at the Center for Strategic and International Studies.
However, Trump has maintained that other countries will foot the bill. “I do not raise your taxes; I raise China and all these countries in Asia and all over the world, including the European Union, which is one of the most egregious,” said in Wisconsin’s public meeting.
Reinsch said that the tariffs, if implemented, would also represent a clear break between long-standing US trade policy and mainstream economic thinking.
Especially when dealing with China, the Biden administration is now relying heavily on a coordinated approach with like-minded partners like Japan and the Netherlands to enforce trade restrictions.
While the Biden administration maintained most of Trump’s tariffs on China and even increased levies on certain high-tech industries, Reinsch described the difference between the two approaches to trade restrictions as “Trump’s sledgehammer vs. Biden/Harris’ scalpel.”
Still, the extent to which Trump’s proposed tariffs are genuine or more than threats has also been the subject of debate.
In an interview with CNBC TV18 released on Tuesday, Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co, said that some of Trump’s top advisers have told him that the proposed tariffs are more of a negotiating tactic for a good trade deal than expected. result.
