Return of the trade war?
Economically, Donald Trump has a measure in mind: increase import tariffs up to between 10% and 20% for all products entering the United States, up to 60% for those from China and even 200% for specific goods.
His stated objective is to improve tax collection and use it as a bargaining chip against countries that, like China, “are destroying” the country, the Republican repeated during his campaign.
The president-elect “never hid that he appreciates import tariffs as a political tool,” recalls Kimberly Clausing, a PIIE researcher interviewed by AFP, who believes he should give them “wide use.”
However, the economic impact could be negative, as import tariffs “could cause an annual increase of $525 billion in Americans’ taxes and reduce GDP by 0.8 percentage points, destroying 684,000 jobs.” “estimate researchers from the Tax Foundation.
Tax cuts to compensate
The Republican candidate has always explained that his plan is projected in two phases: a tax reduction that offsets the increase in import tariffs with zero impact for American taxpayers.
Trump wants to extend the tax cuts he made during his first term in 2017, and this time extend them even to the middle classes.
But the customs collection should only partially offset the exemptions while the US debt could skyrocket, with an additional $15 billion, according to the Committee for a Responsible Federal Budget (CRFB).
To compensate, drastic spending cuts are expected, and Trump could hand that responsibility to billionaire Elon Musk. The owner of Tesla and SpaceX has assured that he could achieve savings of several billion dollars a year.
The measures could be to the detriment of the poorest, warns Margot Crandall-Hollick, associate researcher at the Urban-Brookings Tax Policy Center, who believes that a “Trump presidency will provide little or no advantage for (people with) low incomes.”
