Tariff plan sparks trade war fears
UNITED STATES: Donald Trump has raised fears of a trade war after one of his long-term advisers suggested a 35 per cent tariff on goods produced abroad by US companies could also be applied to international firms.
Trump campaigned as a hardline trade protectionist who pledged to keep the US from being ‘‘ripped off’’ by the likes of China and Mexico.
His first concrete action as president-elect was to strike a deal to keep a Carrier furnace plant in Indiana from moving to Mexico, granting US$7 million (NZ$9.9 million) in tax breaks to do so.
In announcing the deal, he warned that other companies who moved jobs overseas would face ‘‘consequences’’. He took to Twitter early yesterday to expand upon that, saying a 35 per cent tax would be levied on goods coming back across the US border, making leaving America a ‘‘very expensive mistake’’.
‘‘The US is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the US without retribution or consequence, is WRONG!’’ he wrote.
Economists and trade experts quickly noted that such a tax on items produced abroad by US companies could make those companies non-competitive if no such tariffs were implemented against imports produced by foreign companies.
‘‘Tariffs are one thing,’’ said Justin Wolfers, an economics professor at the University of Michigan. ‘‘Tariffs that attack only US firms are another altogether.’’
Newt Gingrich, the former speaker of the house who has advised Trump, said he believed the 35 per cent tariff would also apply to goods from European and Asian companies.
‘‘The only question is does that tax apply to everybody? So if you’re Toyota or you’re Mercedes or whatever are you also going to pay that tax? I suspect the tax will apply to all imports,’’ he said.
If Trump were to attempt to implement new tariffs on imports, the US would be likely to face retaliatory measures from its trading partners.
Mike Pence, the soon-to-be vicepresident, offered little certainty yesterday. He said Trump would decide whether to intervene with certain companies ‘‘on a day-byday basis’’ to protect US jobs.
- Telegraph Group