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| Donald Trump speaks about global trade policy at the Economic Club of Chicago headquarters on October 16. Photo: AFP |
Specifically, if elected, the former President said he would increase taxes by 20% on all goods imported from the US, at least 60% on products from China, 100% on countries that do not use the dollar in transactions, and even 2,000% on cars made in Mexico.
If implemented, the tariffs would be much higher than the former president's previous term. According to the Tax Foundation, the average tariff on all US imports is currently around 2%, and Trump's plan could raise it to "a level not seen since the Great Depression around 1930." According to NBC News' analysis, Trump's tariff policies are intended to "punish" US businesses that import raw materials and goods from abroad, while encouraging domestic consumption. However, the "dilemma" occurs when US businesses cannot source goods domestically at equivalent prices, leaving consumers to bear the consequences of the tariff policy. Vice President Kamala Harris has criticized Trump's policies as a "new consumption tax on the American people," and predicted that each American family would have to spend an additional $4,000 per year if Trump took office. Harris' campaign spokesman Joseph Costello also said that Trump's tariff policies would "permanently increase inflation" and "destroy manufacturing jobs" in the US. Do tariffs affect American consumer prices? Many economists agree with Vice President Kamala Harris and her allies, saying that increasing tariffs will increase consumer prices. However, the specific impact of these policies is still controversial among experts. According to economist Adam Hersh at the Economic Policy Institute (USA), instead of $4,000, each family in the US will have to pay an additional $2,500 - $3,000 if Donald Trump applies the above tariff policies. While tariffs on 100% imported goods would increase significantly, the price increase would be much lower for items made in the US with imported components, such as cars or airplanes, according to Michigan State University economist Alan Deardorff. In fact, prices of some domestic products increased significantly after Trump first imposed tariffs in his last term. After the US imposed a 20-50% tariff on washing machines from South Korea's LG Group in 2018, LG's domestic competitors also raised prices on their products to make more profits amid increased demand. Even the price of domestic clothes dryers increased during this period, as they are often purchased together with washing machines. In fact, some studies have shown that Trump's tariff policies have had a negative impact on the US economy. According to a report by the New York Federal Reserve, Mr. Trump's tariff policy has caused a loss of $1.4 billion per month for American consumers. If Mr. Trump is re-elected, the Tax Foundation estimates that his new tariff policies will reduce the total US GDP by 0.8%, and take away more than 684,000 job opportunities for workers. Will Mr. Trump's tariff policy be feasible? Experts from the Wall Street Journal analyzed that even if he is elected, former President Trump will face some barriers to implementing his tariff policy. According to the US Constitution, the right to decide on trade policies belongs to the US Congress. In the context that the Democratic Party is expected to take control of the House of Representatives in the upcoming election, Mr. Trump's tariff policy may be difficult to realize. On the other hand, Mr. Trump can also declare an economic emergency from "unusual foreign threats" through the International Emergency Economic Powers Act (IEEPA). However, declaring all foreign imports in violation of IEEPA is extremely difficult. And if Mr. Trump declares a national emergency, he may face obstacles from the US Supreme Court. In fact, the Supreme Court has rejected economic policies that go beyond the President's power, such as the $400 billion student debt relief bill of current President Joe Biden. What do American voters think about tariffs? Despite the feasibility and potential risks, the tariff policy still receives widespread support from American voters. According to a Reuters/Ipsos poll in September, up to 56% of American voters support Mr. Trump's plan because they believe tariffs will protect domestic jobs. Explaining the reasons for voter support, Robert Lawrence, a professor of trade at the Peterson Institute for International Economics, said: “Many voters believe that tariffs protect domestic jobs, and they like the idea that they help American workers. In fact, the United States will buy fewer goods from abroad because they are more expensive. So there will be a negative impact on American inputs, and therefore we will be able to produce less abroad.” Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, said: “What the public does not understand about tariffs is that they raise prices for consumers and also for businesses that use protected inputs. They're not really effective in bringing jobs back on a large scale." But Obstfeld acknowledged the appeal of tariffs to voters facing job losses in manufacturing. "Economists might say that if businesses can't compete, they should go bankrupt, but for workers, it's a different story," Obstfeld told NBC. "That's one of the reasons protectionism is popular. Because without government protection, a lot of Americans would be poor." Congthuong.vn
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