In case you hadn't heard, there is a U.S. presidential debate coming up this week. I'm not expecting an in-depth and wonky policy discussion in general, and trade policy sometimes doesn't even get a mention at these things. Nevertheless, I've been gathering statements Trump has made on tariffs over the past few months, and this debate seems like as good an excuse as any to post them. I'm not sure what to say about all of the quotes that follow, except maybe ... read 'em and weep? Anyway, here are some things from Trump, and then at the end of the post are a couple brief points on how some of it might actually be implemented.
First, last year Trump laid out his trade agenda here: Agenda47: Cementing Fair and Reciprocal Trade with the Trump Reciprocal Trade Act. The core of his "reciprocity" plan is the following:
- Under the landmark legislation, if any foreign country imposes a tariff on American-made goods that is higher than the tariff imposed by the U.S., President Trump will have the authority to impose a reciprocal tariff on that country’s goods.
- To ensure fairness, the Act will empower President Trump to negotiate the reduction of tariffs on foreign goods if foreign countries agree to reduce their tariffs on American goods.
The first item is the key one: Where foreign tariffs are higher than U.S. tariffs, the Trump administration would raise tariffs to the foreign levels. As to the second item, I would be shocked if the Trump administration negotiated tariff reductions, but it would be fun if a foreign government made a public proposal that it would lower its tariffs on U.S. products to zero if the Trump administration did the same.
Next up, Jeff Stein of the Washington Post, in an article entitled "Donald Trump is preparing for a massive new trade war with China," reported on Trump discussing a 60 percent tariff on Chinese imports:
"Privately, Trump has discussed with advisers the possibility of imposing a flat 60 percent tariff on all Chinese imports, according to three people familiar with the matter who spoke on the condition of anonymity to relay private conversations."
"Despite tariffs’ destabilizing impact on the global and U.S. economies, Trump has promised to dramatically expand their use in a second term. He has floated enacting a “universal baseline tariff” on virtually all imports, or roughly $3 trillion worth of goods, which would amount to more than a ninefold increase in the amount of goods subject to tariffs compared with his first term. He has also talked about pushing legislation to have the United States automatically impose “reciprocal” tariffs matching those of all countries on U.S. exports, which would almost certainly lead to a sharp rise of trade hostilities."
Trump's conversation about a general 10% tariff (the “universal baseline tariff”) is here.
And here is a Trump interview with Maria Bartiromo of Fox News that discusses tariffs:
Bartiromo: Is it possible to decouple, or is it just tariffs, the way you dealt with it? You used tariffs and sanctions against China.
Trump: I did, and I did very well with it. As you know, we took in hundreds of billions of dollars in taxes with the tariffs, taxes and tariffs ...
Bartiromo: Is that what you want to do again?
Trump: We have to do it. I mean, look, their stock market almost crashed when it was announced that I won the Iowa primary in a record, and then when I won New Hampshire, their stock market went down like crazy. So you know, obviously, I'm not looking to hurt China. I want to get along with China, I think it's great. But they've really taken advantage of our country, and we turned it around. We put big tariffs on steel. I saved the steel companies, and now Japan is buying US Steel. US Steel. You know what a name that is? That's the most important name, 50 years ago there was no company like US Steel. Now Japan is buying it. I don't think I'd let that deal go through by the way.
Bartiromo: Well, your critics are saying that you're gonna start another trade war.
Trump: It's not a trade war, I did great with China, with everything. Look, China came in, they were going to destroy our steel industry, and I put tariffs, big tariffs. 50%, 100%, but 50% for the most part. It stopped it. I have steel people that every time they see me, they start to cry. They hug me. They say, you saved our industry. But now we're letting it go
Bartiromo: Now the Washington Post is saying that you're talking about 60% tariffs on Chinese goods. Is that in the cards?
Trump: No, I would say maybe it's gonna be more than that. Because we're going to have ... look, I want China to do great. I do. And I like President Xi a lot. He was a very good friend of mine during my term ...
...
Look, it's not sustainable for this country to lose $500 billion a year every year like, like, like the sun rises. We lose $500 billion a year. No country can sustain that. And we're not going to do it because the people that ran our country allowed it to happen.
And then there's a Bloomberg article that starts off this way: "Donald Trump is targeting the European Union for a potential slew of punitive trade measures designed to address long-standing grievances should he retake office, according to people familiar with his team’s nascent economic-platform discussions. ... If Trump wins in November, the EU undoubtedly will be one of his chief targets on trade, according to conversations with several Trump advisers." Targeted how? Like this:
A likely starting point in a second Trump administration would be the EU’s inclusion in a broad minimum 10% tariff, which would also be applied to China, his allies said. He might also assemble counter-measures against European digital services taxes that implicitly go after US technology champions, using Section 301 of the US trade law, the allies added.
And here's Trump speaking at a campaign rally and identifying India and Brazil as targets too:
I will pass the Trump reciprocal trade act. If China or any country makes us pay a 100 or 200% tariff, we will make them pay a reciprocal tariff of 100 or 200% right back. In other words, if you screw us, we will then screw you. It's very easy, very simple, a very simple plan. Very simple plan. China charges us 100% and 200%. And others do. India's very, very, a very big abuser. Brazil. They charge us, we don't charge them. We were charging them a lot. We took in billions of dollars. We took hundreds of billions from China, we never took in anything. And as the tariffs on foreign countries go up, taxes on American workers and families will come down dramatically. Because we will be taking in a lot of money. You know, we have this tremendous deficit. We're not going to have much of a deficit, we'll do the reciprocal trade act, that's gonna get rid of a big chunk of our deficit, and you won't have to pay a damn thing. You won't have to pay a thing. Don't let the fake news tell you that it costs you, no, it doesn't cost you.
And here was Trump on CNBC:
SORKIN: Mr. President, I just wanted to ask you, though, you’ve also talked about proposing a 10% tariff, ... . I wanted to ask you about that because the center right American Action Forum, which is a think tank, said that they thought the plan would "distort global trade discourage economic activity and have broad negative consequences for the U.S. economy."
PRESIDENT TRUMP: Well, they’re wrong. It would distort international trade. It would bring it back to the United States. We have companies, if you look at India, you look at China, you look at so many different countries, they’re smart, much smarter than our country. We were getting ready to do this and I had it just about set –
SORKIN: But you don’t think it would result in higher prices for American families? By some estimates, it could be the equivalent of $2,000 a family according to the economist.
PRESIDENT TRUMP: No, I think taxes could be cut, I think other things could happen to more than just that. But I’m a big believer in tariffs for two reasons. Number one, I fully believe in them economically when you’re being taken advantage of by other countries. For instance, China was taking advantage of us on the steel, they were destroying our entire steel industry, which was never doing very well over the last 25 years anyway, but you know, because it’s been eaten alive by foreign competition, and they were dumping steel. I put a 50% tax on China’s steel coming in and every person in the steel industry when they see me they started crying. They were to hug me, they would kiss me, sir you saved our industry. I put a very strong 50% tariff on dumping steel, on their dumped steel. And by the way, it, nothing was perfect. Frankly, the tariffs should have been higher. I was getting ready to do that by the way but the tariffs should have been higher. This saved a whole industry but one thing, let me just say beyond the economics, it gives you power in dealing with other countries because China would come in and said no, no, no more tax. They were absolutely fine for me to deal with because they were so petrified of me putting on additional tariffs. And we don’t use that, China is right now our boss. They are the boss of the United States, almost like we’re a subsidiary of China and that’s because the Biden administration has been so weak.
MELISSA LEE: Mr. President is there no concern that China could impose retaliatory tariffs or retaliatory actions that would make doing business in China difficult for American companies, which are dependent on China for growth?
PRESIDENT TRUMP: That’s ok, yeah sure they might do that.
LEE: So tell Starbucks, tell McDonalds that is going to be all of a sudden maybe more difficult to do business there.
PRESIDENT TRUMP: Sure but they didn’t do it with me. You know, we went through years and they didn’t do it with me. And they never pulled that trigger. That’s a big trigger for them to pull. But even if they do, let American companies come back to America. If you want to sell a car in China, you can’t okay, you pay a massive tax or massive tariff. If we make our cars, we can’t sell in China, they charge tremendous tariffs. Well, they’re very smart. They’re saying, come over to this country. Look at Apple. I’ve had a great relationship with Apple and everybody over there was fine. But I said you got to build your plants here. They built a big plant in Texas. I was working on that very, very hard with various companies that they build in China because if they build in China, they have no tax on it so they make it in China. I said we want you to make it here. They were coming back, they did. They came back with a very big plant here said I’m not doing this unless you – the whole topic of tariffs to me is so simple. Number one, it’s great economically for us and it brings our companies back because if you charge tariffs to China, they’re going to build their car plants here and they’re going to employ our people. They’re right now building big plants because of Biden. They’re building big plants in Mexico. So they build a big giant of plants in Mexico then they sell it across the border with very little tax. It’s ridiculous. We want them to build their plants in the United States. We don’t want to get cars from China. We want to get cars made by China in the United States using our workers but it also gives us a big political power. Tariffs are tremendously powerful in terms of stopping wars, because they don’t want tariffs. And frankly, I made them sing, I made other countries sing with the threat of tariffs. And if you don’t have tariffs, we have nothing whatsoever on them. We have lost such an opportunity when I’ve seen if you want to build a Harley Davidson as an example. I said, How are you doing in India? They were in the White House. How are you doing in India? No good. Why? They have a 100% tariff, but more than that even and therefore we basically get it because you have to double and triple the price in India. It’s just so, what are you going to do? Well, they want us to build a plant in India that way we don’t have so they go, they go and they build a big plant in India. We started, under me we started doing the same thing here. And we have the pot of gold. We have the best pot of gold, but eventually we won’t have that because our country is going down and we’re not going to have it. We’re losing our economic power.
China building car factories in the U.S. is kind of interesting! I'm not sure how many politicians would support this right now, but I'd love to see them asked about it. Trump repeated this at a subsequent campaign rally:
Mexico has taken, over a period of 30 years, 34% of the automobile manufacturing business in our country, think of it, went to Mexico. China now is building a couple of massive plants where they're going to build the cars in Mexico and think they think that they're going to sell those cars into the United States with no tax at the border. Let me tell you something to China. If you're listening, President Xi, and you and I are friends, but he understands the way I deal, those big monster car manufacturing plants that you're building in Mexico right now, and you think you're going to get that, you're going to not hire Americans and you're going to sell the cars to us now, we're going to put a 100% tariff on every single car that comes across the line, and you're not going to be able to sell those cars. ... And I'll tell them if they want to build a plant in Michigan, in Ohio, in South Carolina, they can, using American workers. They can't send Chinese workers out there, which they sometimes do. But if they want to do that, we're welcome. Right? But they're not going to build them in Mexico and they're not going to do that. We're going to tariff them at 100%.
Then here's Trump in an interview with Time magazine:
Let’s shift to the economy, sir. You have floated a 10% tariff on all imports, and a more than 60% tariff on Chinese imports. Can I just ask you now: Is that your plan?
Trump: It may be more than that. It may be a derivative of that. A derivative of that. But it will be somebody—look when they come in and they steal our jobs, and they steal our wealth, they steal our country.
When you say more than that, though: You mean maybe more than 10% on all imports?
Trump: More than 10%, yeah. I call it a ring around the country. We have a ring around the country. A reciprocal tax also, in addition to what we said. And if we do that, the numbers are staggering. I don't believe it will have much of an effect because they're making so much money off of us. I also don't believe that the costs will go up that much. And a lot of people say, “Oh, that's gonna be a tax on us.” I don't believe that. I think it's a tax on the country that's doing it. And I know. Look, I took in billions of dollars from China. Nobody else ever did anything on China. I also let people know what the threat of China was. China was going along making $500 to $600 billion a year and nobody was ever even mentioning it until I came along. What's happening in Detroit is very sad because electric cars with this EV mandate, which is ridiculous, because they don't go far. They cost too much and they're going to be made in China. They're all going to be made in China.
Mr. President, most economists—and I know not all, there isn't unanimity on this—but most economists say that tariffs increase prices.
Trump: Yeah.
Are you comfortable with additional inflation?
Trump: No, I've seen. I've seen—I don't believe it'll be inflation. I think it'll be lack of loss for our country. Because what will happen and what other countries do very successfully, China being a leader of it. India is very difficult to deal with. India—I get along great with Modi, but they're very difficult to deal with on trade. France is frankly very difficult on trade. Brazil is very difficult on trade. What they do is they charge you so much to go in. They say, we don't want you to send cars into Brazil or we don't want you to send cars into China or India. But if you want to build a plant inside of our country, that's okay and employ our people. And that's basically what I'm doing. And that’s—I was doing and I was doing it strongly, but it was ready to really start and then we got hit with COVID. We had to fix that problem. And we ended up handing over a higher stock market substantially than when COVID first came in. But if you look at the first few years of what we did, the numbers we had were breathtaking. There's never been an economy—
Sir, the economy was certainly humming during your first term. There's no question about it. But, you know, Moody's did say that your trade war with China cost the U.S. economy $316 billion and 300,000 jobs. [Editor’s note: The estimate of $316 billion was made by Bloomberg Economics, not Moody’s.]
Trump: Yeah. Moody’s doesn’t know what they’re talking about. We had the greatest economy in history. And Moody's acknowledges that. So how did it cost us if we had such a good economy? Everybody admits it. If we didn't do that, we would have no steel industry right now. They were dumping steel all over this country. And I put a 50% tariff on steel. It was gonna go higher. And the people that love me most are businesses, but in particular, the steel industry. They love me because I saved their industry. I've had owners of steel companies and executives of steel companies come up and start crying when they see me. They say, nobody, nobody helped us until you came along. China was dumping massive amounts of steel into our country. And we saved the steel industry.
Do you think that businesses pass along the cost of a tax to the consumer?
Trump: No, I don’t believe so. I believe that it cost the country that—I think they make less. I actually think that the country that is being taxed makes less. I don't believe—
You don't believe that businesses pass on the cost?
Trump: No, I think what happens is you build. What happens to get out of the whole situation is you end up building, instead of having your product brought in from China, because of that additional cost, you end up making the product in the United States. And that's been traditionally what happened. If you look at what goes on. If you look at China, they don't want our cars. They charge them tremendous numbers. You look at India. India is a very good example. I get along very well with the people, representatives of India. Modi is a great guy, and he's doing what he has to do. But we had a case with Harley Davidson, I had Harley Davidson on the White House. I said, “How are you doing? How's business? Very good? Everything's good?” I said, “Just out of curiosity, how do you deal with India?” “Not Well.” Now you’ve got to remember, this is five years ago, four years ago, they said, “Not well. We can't do business with India, because they charged us such a big tariff, it was over 100%.” And at that price, you know, there's a point at which the consumer breaks and can't buy. They said, “But they will do anything for us to build a Harley Davidson plant in India. They don't want us to give motorcycles to India, but they do want us to build a plant.” I said, “Well, I'm not going to be very happy with that.” But that's ultimately what happened. They built a plant in India. And now there's no tax, and I'm saying we're doing the same thing. We're gonna build plants here. Now something that's taking place that nobody's talking about, maybe don’t know, but I have a friend who builds auto plants. That's what he does. If you ask him to build a simple apartment someplace, he wouldn't know how to do it. But he can build the plant, millions of feet, the biggest plants in the world. He's incredible. And I said to him, “I want to see one of your plants.” And he said to me, “Well, are you ready to go to Mexico? Are you ready to go to China?” I said, “No, I want to see it here.” He said, “We're not really building them here, not the big ones, the big ones are being built right now in Mexico or China.” China now is building plants in Mexico to make cars to sell into the United States. And these are the biggest plants anywhere in the world. And that's not going to happen when I'm President, because I will tariff them at 100%. Because I'm not going to allow them to steal the rest of our business. You know, Mexico has taken 31% of our auto manufacturing, auto business. And China has taken a much bigger piece than that. We have a very small percentage of that business left and then you have a poor fool like the gentleman is at the United Auto Workers who is okay with the fact that we're going to do all electric cars and it's so sad to see because the all electric cars are just not what the consumer wants.
...
Just to clarify something you said a moment ago: You're considering a 100% tariff on Chinese and Mexican imports?
Trump: I didn't say that. They charge us 100%. But they charge us much more than that. India charges us more than that. Brazil charges us what—Brazil's a very big, very big tariff country. I ask people, Who are the worst to deal with? I'm not going to give that to you because I don't want to insult the countries because I actually get along with them. But you'd be surprised. The E.U. is very tough with us. They don't take our foreign products. They don't take our cars. We take Mercedes Benz and Volkswagen and BMW. They don't take our cars. If we want to sell a Chevrolet, even if we want to sell a Cadillac, a beautiful Cadillac Escalade, if we want to sell our cars into Germany, as an example, they won't take them.
Let's come back to Europe later.
Trump: I said to Angela Merkel, “Angela, how many Chevrolets are in the middle of Berlin?” She said none. I said, “You're right about that. But we take your cars, including cars that aren't that expensive, like Volkswagen, relatively speaking.” I said, “Do you think that's fair?” She said, “Probably not, but until you came along, nobody ever mentioned it.”
And here's Trump at a New Jersey rally talking again about tariffs on cars made by Chinese factories in Mexico (42:35 of video):
China is building massive automobile plants. I'm sure you gonna be thrilled to hear this. A friend of mine builds automobile plants. ... I said, I want to see one of the plants. He said, Well, you'll have to go to Mexico. I said why? He said the big ones are being built in Mexico. I said what about the United States? No, the big ones are being built in Mexico. Biden has taken so much incentive away and they're moving into Mexico. And what's happening is the really big ones are being built by China in Mexico to make cars in Mexico, by China, to sell into the United States, to come across the border with no tax. I said wait a minute, you mean, the big automobile plants under construction now being built in Mexico? That's right. ... I said, so they're being built in Mexico, and they're owned by China. And China's running them right now. And they're doing that to avoid tax and labor expensive, more expensive labor and they're gonna sell all those cars into the United States. Yeah, they're built so that he makes the cars in Mexico, China, and they sell them here. I said that won't happen. I said, I will put a 200% tax on every car that comes in from those plants, and they're not going to do that because they'll destroy our automobile business, and Biden doesn't want to get involved. And those aren't electric vehicles necessarily. Those are gas powered vehicles, which he's not doing anything about. Do you notice he's trying to save the electrical vehicle but not the gas powered, which is the vehicle that everybody wants? So you don't have to worry about those plants, if I'm elected. If I'm not elected, those plants are going to close up every automobile job in America, you won't be making one automobile in the United States of America.
And then most recently, there have been reports that Trump "floated the concept of eliminating the income tax and replacing it with tariffs." The math doesn't work at all on this, but regardless, given everything else that was said above, it's not too surprising to hear this sort of thing. In addition, Trump appears to think the McKinley tariffs were some sort of great success, something he made reference to years ago as well.
So how would the executive branch accomplish all of this under a Trump presidency? A Washington Post article tells us that "[a]llies of the former president are searching for legal justifications for charging duties on all imports." For more specifics, we turn to former U.S. Trade Rep. Robert Lighthizer, who said this last December:
... Mr. Lighthizer said that given the size of the U.S. trade deficit and its impact on the American economy, a president would have “clear authority” under two laws — the International Emergency Economic Powers Act and Section 338 of the Tariff Act of 1930 — to impose tariffs unilaterally.
IEEPA has probably become familiar to people at this point. Section 338 was explained by John Veroneau and Catherine Gibson of Covington & Burling here. In a nutshell:
Section 338 permits the president to impose “new or additional duties” on countries that have discriminated against commerce of the United States. Section 338 authority is triggered when the president finds that a foreign
country has either (1) imposed an “unreasonable charge, exaction, regulation, or limitation” on U.S. products which is “not equally enforced upon the like articles of every foreign country”; or (2) “[d]iscriminate[d] in fact” against U.S. commerce “in respect to customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction or prohibition” so as to “disadvantage” U.S. commerce as compared to the commerce of any foreign country.
There was also this from Politico: "One legal tool that’s been floated is Section 122 of the Trade Act of 1974, which authorizes tariffs of up to 15 percent against countries that have “large and serious” trade surpluses with the U.S."
I thought it might be difficult to match the intensity of trade policy during Trump's first term, but it seems like they plan to give it a shot!
