Trump has announced he intends to levy a 25% tariff on goods imported from Canada and Mexico, countries with which the US has a free trade agreement, on day one of his second term which starts on 20 January. He is also going to jack-up existing tariffs on Chinese goods by a further 10%. He thinks that Mexico, Canada and China are going to pay these tariffs. I am pretty sure he hasn’t agreed any of this with his cabinet and certainly not with his new Treasury Secretary Scott Bessent. I would also bet that this doesn’t happen.
US consumers will be the ones to suffer since they ultimately will bear most if not all of the extra costs. Certainly, none of the three countries' taxpayers will pay the tariffs.
I suspect somebody - I don’t envy whoever it is - will have to explain to him what the immediate potential impact would be. Prices of finished goods coming in will increase and sales will drop because of it, triggering shortages in US supermarkets and in the supply chains feeding American factories.
I’ve read Project 2025 and Agenda47, his own manifesto such as it is, and tariffs are certainly mentioned but as far as I can see only in the context of reciprocal tariffs. That is to say against other countries that are perceived to be imposing unfair tariffs against the USA. Agenda47 quotes Trump himself:
“Under the Trump Reciprocal Trade Act, other countries will have two choices—they’ll get rid of their tariffs on us, or they will pay us hundreds of billions of dollars, and the United States will make an absolute FORTUNE” President Trump said.
It's all about reciprocity. Mexico and Canada aren't mentioned and don’t impose tariffs anyway, but Trump seems to think slapping tariffs on everything is some sort of magic bullet. He now claims to be hitting America’s nearest neighbours to force them to stop illegal immigrants and drugs crossing the border into the US. It looks like policymaking on the hoof. As far the United States making a fortune, that's just plain stupid.
Mexico has already said it would reciprocate. Even if tariffs are introduced, the impact on the American economy is likely to force a rapid rethink
His Treasury man, Bessent, a billionaire hedge fund manager, doesn’t think rising prices will affect inflation.
".. During a radio interview Saturday .., Bessent said 'tariffs can’t be inflationary because if the price of one thing goes up -- unless you give people more money -- then they have less money to spend on the other thing, so there is no inflation.'" @cnn.com www.cnn.com/2024/11/25/b...— Carl Quintanilla (@carlquintanilla.bsky.social) 25 November 2024 at 16:16
In a sense, this is probably technically true. Inflation is a symptom of an excess of money. Too much money chasing too few goods creates inflation, but if prices rise, consumers don’t like to curb their spending or see a drop in living standards and they tend to press for higher pay. Higher pay puts more money into the economy, further exacerbating price rises and a dangerous inflationary spiral begins.
At least that’s my very limited understanding of how it all works.
Another strand of Trump’s plan for his second term is the deportation of millions of undocumented migrants. I doubt this will happen either. Certainly not at the scale proposed. There are likely to be lengthy legal challenges. Many states are implacably opposed to the whole idea. The farming lobby won’t be happy to see a significant group of their workers being rounded up and interned in camps. Many businesses in the hospitality industry employ these immigrants in low-paid, cash-in-hand type jobs, too.
As for deregulation, I am sure they will run into the same problems as the Tories after Brexit. The right has some mystical belief that all regulations are bad but they're usually imposed for a reason and ditching them quite often results in some very unhappy constituencies. The consequences of scrapping rules willy-nilly can often be electorally disastrous. Plus, a lot of Republican senators might feel very differently when they're lobbied by those affected.
His health secretary Robert F Kennedy Jr wants to see a lot of the additives in American food banned. How is he going to do this without even more regulation?
I just don’t think Trump or the authors of Project 2025 or Agenda47 have thought any of it through properly.
The bigger question for me is how long Trump will last. He is 78 and descending into senility. He's obsessed with petty grievances and revenge and is even more unpredictable and capricious than in 2016. The 25th Amendment allows Vance to take over if the president "is unable to perform their duties due to sickness or disability" as determined by the VP alone or a majority of his cabinet.
Trump is absolutely unique. He is an extraordinary fraud, con man, narcissist, and megalomaniac. His cult has displaced the Republican party which no longer functions as a political movement with endless committee meetings and reasonably democratic rules. Whatever comes out of Trump's mouth is immediately policy, no matter how crazy or damaging to America or American interests it is.
When he's gone, who in the Republican party could carry on the con? Who will control the mob? Who would be able to defend the insanity into which Trumpism has driven the GOP?
In February, Trump could announce he won't introduce tariffs at all, undocumented immigrants will be given amnesty, he's going to increase military support for Ukraine and begin a campaign to eliminate fossil fuel use in the USA by 2030, and his supporters would accept it all as perfectly normal. His cabinet would immediately begin arguing the exact opposite of everything they've been saying for the last four years.
Trump could do it, but who else? I don't see that person. And that is the big problem for Republicans and for America.
