Former President Donald Trump is reportedly considering enacting a universal tariff of 10 per cent if he is returned to the White House in 2025, a move that experts believe could trigger a global trade war.
Mr Trump met last week with a selection of his top economic advisors at his New Jersey golf club, The Washington Post reported on Tuesday. Out of that meeting came a potential economic focus for his ongoing campaign: an aggressively protectionist trade policy the likes of which no president in modern US history has ever enacted.
Mr Trump has favoured populist economic rhetoric throughout his time in national politics. He opposed the Trans-Pacific Partnership (TPP) during his 2016 race against Hillary Clinton, drawing a sharp contrast with the Democratic nominee, and briefly enacted tariffs on Mexican and Canadian imports during his first term as president.
Mr Trump also used his authority as president to level tariffs against China, which led the Chinese government to respond by enacting tariffs on US agricultural exports.
Economists were largely critical of the effect Mr Trump’s economic protectionism had on the American economy, but the tariffs he enacted during his first term were nothing on the scale of what he is reportedly considering for his second.
A tariff of 10 per cent on nearly all goods coming into the US could dramatically reshape both the domestic and international economies, radically changing the trade incentives for people in the US and well beyond its borders. Other governments could respond with tariffs on US goods, hurting certain industries while potentially boosting others.
The policy would be a return to a kind of economic nationalism rarely embraced by powerful capitalist countries: one that is designed to protect the interests of American businesses and reduce competition from foreign companies. It’s a type of economic agenda that used to be anathema to the Republican Party, though the party has changed since Mr Trump rose to power.
“When we were the dominant economy, free trade was the rational strategy,” Newt Gingrich, a Trump associate and former Republican House speaker, said in an interview. “Whether that is still a rational strategy is unclear.”
Mr Trump’s opposition to TPP placed him on the same side of the major trade issue of that year’s election as Sen Bernie Sanders of Vermont and other leftist populists sceptical of the free trade status quo, though no prominent left-wing figure has embraced enacting universal tariffs.
Mr Sanders, for one, strongly criticised Mr Trump’s tariffs on Canada and Mexico — calling them “haphazard and reckless” and asking for targeted penalties to be levied against countries that lack labour protections for workers and do not engage in fair trade practices.
Mr Trump, who is under four separate criminal indictments, is the polling leader in the race for the Republican nomination. The first Republican primary debate, which Mr Trump will not take part in, is set for Wednesday night.
