Donald Trump intends to introduce the largest tariffs in a century, some of which he will use as a bargaining chip in trade negotiations, reports the Washington Post. The newspaper emphasizes that the announced introduction of universal tariffs is currently unlikely.
“Trump wants to use high tariffs to adjust global trade to domestic production and increase government revenues that could help reduce taxes and pay for other programs,” explains “WP.” The president-elect announced imposition of 60 percent customs duties on imports from China and 10-20 percent for all other foreign products.
According to several trade lawyers interviewed by the American daily, Trump's first trade decisions will probably be aimed at China. “In this case, he can rely on existing powers arising from the 2018 investigation into Chinese trade practices.” – notes “WP”.
“However, the possibility of imposing universal tariffs is less certain,” the newspaper adds.
Michael Feroli, chief economist at JPMorgan USAstates in its analysis that “procedural considerations” will likely make it difficult to introduce a universal tariff, but action against Chinese products could come much sooner.
“The threat of tariffs is being used as a tool to encourage domestic investment and production, not as an independent policy that should be implemented from day one,” notes Bob Elliott, CEO of Unlimited Funds.
Customs duties difficult to implement
John Veroneau, deputy U.S. Trade Representative under President George W. Bush, emphasizes that “Congress has never given the president broad authority to impose tariffs for any reason.” Therefore, in his opinion, a universal basic duty would face serious legal challenges.
Some trade lawyers interviewed by the Journal point out that Trump could justify imposing such a tariff by citing the president's broad powers under the International Emergency Economic Powers Act, which he used several times during his first term, including against Chinese applications. TikTok and WeChat.
– Alternatively, he could invoke a provision of the 1974 trade law that allows the president to impose a general tariff of up to 15 percent. for 150 days in response to a “large and severe” balance of payments deficit, according to Wendy Cutler, vice president of the Asia Society Policy Institute. This provision has never been applied before – emphasizes “WP”.
“Economists warn that tariffs coupled with Trump's plans for mass deportations of illegal immigrants will raise prices and slow down the US economy. The prospect of new tariffs causes some managers to delay planned investments,” writes “WP”.
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