Donald Trump is escalating his threats to increase tariffs on imports if he wins a second term in the White House, reviving fears of renewed trade wars that hit the global economy during his presidency.
The Republican candidate, seeking to win blue-collar votes in swing states pivotal to November’s presidential election, has doubled down on his protectionist rhetoric, delivering blunt warnings of tariffs to US trading partners including the EU.
On Saturday, Trump went further, promising tariffs of 100 per cent on imports from countries that were moving away from using the dollar — a threat that could engulf many developing economies too.
“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 said at a rally in Wisconsin.
“If we lost the dollar as the world currency, I think that would be the equivalent of losing a war,” he told the Economic Club of New York on Thursday.
Trump is reviving his “America first” economic agenda as he battles Democratic candidate Kamala Harris for the White House, and has vowed to impose a tariff 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 said in New York last week.
One former trade official, who is familiar the Trump’s thinking on trade, said he could also reimpose tariffs that were suspended by President Joe Biden, including on steel and aluminium imports and on European goods as part of the long-running dispute over aircraft subsidies.
“The Biden people really gave the Europeans some big wins out of the gate . . . the Europeans didn’t really give the Biden administration anything,” he said. “The EU uses the rules to help their companies and hurt American companies.”
European officials have warned they have retaliatory options in place. Trump’s term in office was characterised by a economically bruising trade war with China.
Trump’s new tariff threats could come under fire from Harris during their presidential debate on Tuesday night, where the rivals will have a chance to lay out their plans for the economy — voters’ most important issue ahead of the November vote.
Harris has criticised Trump’s plans for a tariff on all imports as a “Trump tax” on American consumers that would hurt middle-class families.
Democrats too have backed a more aggressive use of tariffs: the Biden administration has maintained the bulk of the tariffs on Chinese imports that Trump imposed, and also announced levies of up to 100 per cent on imported Chinese electric vehicles.
Trump has not offered more details of his plans to slap tariffs on countries leaving the dollar. But it could hit several large G20 developing economies — including China, India, Brazil and South Africa — or even countries using the euro to trade.
Trump has proposed 60 per cent tariffs on goods imported from China, and has said Chinese cars reaching the US through Mexico should face tariffs of 100 per cent.
Trump last week expressed a preference for tariffs as a tool for international relations over sanctions, saying the latter “kills your dollar and it kills everything the dollar represents”.
But economists warn 100 per cent tariffs could backfire.
“The dollar’s global role has stemmed from the fact that countries voluntarily choose to use it for a whole range of international transactions,” Brad Setser, a fellow at the Council on Foreign Relations and a former Treasury official, wrote on X.
EY-Parthenon’s chief economist Gregory Daco said levies of this nature would have “dire consequences for the US economy”, denting consumer spending and business investment while hampering growth.
Daco said 60 per cent tariffs on Chinese imports and 10 per cent universally — and the retaliatory measures they would induce — would cut 1.2 percentage points from GDP growth in 2025 and 2026, to 0.5 per cent and 0.8 per cent respectively.
When he was in the White House, Trump’s tariff plans — which break with Republican free-market orthodoxy — faced opposition from some of his economic aides and some congressional Republicans.
Resistance within his party has been fading.
In an interview with the Financial Times, Patrick McHenry, the Republican chair of the House financial services committee, hit back at “hyperventilation” about Trump’s proposals.
“Commerce across the globe has benefited America greatly [and] has given strength and capacity to the dollar, but president Trump wants to ensure that American interests are thought of much more highly in these engagements,” he said.
The former Trump trade official said the ex-president was simply trying to return the US to “stable” 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 said.
JD Vance, Trump’s running mate, suggested in a recent FT interview that the US could raise tariffs on Nato allies to force them to spend more on defence. “I think that we have to be willing to apply some pressure on our allies to actually spend more on defence,” he said.
However, higher US tariffs on EU goods would automatically mean retaliatory tariffs on iconic US products such as Harley-Davidson motorbikes and bourbon whiskey.
The EU’s responses could also include blocking investment from overseas, and penalising procurement bids benefiting from subsidies.
“Trump’s views are the same as last time. So we better prepare ourselves,” said an EU official.
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