It’s easy to dismiss many presidential candidates’ campaign promises as empty, because Congress would need to approve them. Tariffs are different.
Presidents have vast powers to lob tariffs on friends and foes, as former President Donald Trump demonstrated when he waged a trade war starting in 2018. That’s why some experts are alarmed and baffled by Trump’s latest threat to use his favorite economic weapon.
During a rally in battleground Wisconsin last weekend, Trump vowed to impose staggering tariffs on countries that snub the US dollar.
“Many countries are leaving the dollar. They are not going to leave the dollar with me,” Trump said. “I’ll say, ‘You leave the dollar, you’re not doing business with the United States because we’re going to put a 100% tariff on your goods.”
The US dollar remains the world’s reserve currency – essentially a super currency that helps international trade flow and the global economy to function. But Trump’s threat appears to be in response to China, Russia and other countries that have made noise about finding an alternative to the greenback.
Taking a hardline on protecting the almighty dollar might sound good on the campaign trail, but experts warn that such a massive tariff would likely backfire on the American people.
“I would characterize this as incoherent, tough-guy posturing,” Maury Obstfeld, senior fellow at the Peterson Institute for International Economics, told CNN in a phone interview.
Obstfeld, former chief economist at the International Monetary Fund (IMF), noted that while some countries have diversified away from the US dollar, the greenback remains the world’s preeminent currency.
Although he cautioned that it’s unclear under what conditions Trump would impose 100% tariffs, Obstfeld said such high levies would raise prices on consumers – especially if they were applied widely.
“100% tariffs would have a pretty severe effect on the price of goods we import from those countries and therefore inflation,” Obstfeld said.
Christine McDaniel, a former senior trade official in the George W. Bush administration, called Trump’s 100% tariff idea “crazy” and “silly season campaign rhetoric.”
“Trump’s answer to just about anything is tariffs,” said McDaniel, now a senior research fellow at George Mason University’s Mercatus Center.
McDaniel told CNN that Trump can likely apply tariffs he’s proposing unilaterally without approval from Congress following a report from the United States Trade Representative (USTR) under Section 301 or a report from the Commerce Department under Section 232. She cautioned that it is possible Congress could amend current law to claw back that trade authority.
Alex Durante, an economist at the Tax Foundation, a right-leaning think tank, told CNN that 100% tariffs would threaten the economy.
“When you’re talking about tariffs this high, that will almost certainly increase the risk of a recession. Consumers only have so much to spend,” Durante said.
Of course, it’s impossible to know how serious Trump is about this proposal. It’s possible he is floating 100% tariffs as just a threat designed to change the behavior of other countries.
Brian Hughes, senior adviser to the Trump campaign, told CNN in a statement that Trump’s policies will “fuel growth, drive down inflation, inspire American manufacturing” and protect workers from “lopsided policies tilted in favor of other countries.”
“Time warp alert! Just like in 2016, Wall Street forecasts said that Trump policies would result in lower growth and higher inflation, the media took these forecasts at face value, and the record was never corrected when actual growth and job gains widely outperformed these opinions,” Hughes said.
The Trump campaign did not provide an explanation to CNN about how Trump would implement 100% tariffs nor what the trigger would be.
Trump has repeatedly insisted that his trade agenda would not invite inflation – even though study after study has found that American consumers and industries bear almost the entire cost of US tariffs, including the ones imposed by Trump.
And while economists may debate how much his proposed tariffs would raise prices, many agree they would be inflationary.
Even some at the University of Pennsylvania’s Wharton School, the elite business school Trump received his undergraduate degree from, don’t doubt that.
“If we actually did have these tariffs, then there is no question prices would go up. The bigger question is how big other countries would respond with their own tariffs,” Kent Smetters, faculty director of the nonpartisan Penn Wharton Budget Model, told CNN in a phone interview on Wednesday.
“There is no question it’s inflationary,” said Smetters, who is a business economics and public policy professor at Wharton. He added that some estimates may overstate the impact of tariffs because tariffed-goods can sometimes be substituted for domestic goods.
During Tuesday night’s ABC debate, Trump said that many of the “top professors” at Wharton “think my plan is a brilliant plan, it’s a great plan.”
Wharton did not respond to CNN requests for members of its faculty who support Trump’s plan.
Joe Brusuelas, chief economist at RSM, described Trump’s threat of a 100% tariff as “radical” and a “profoundly bad set of ideas.”
“I’m not certain what Mr. Trump is talking about and, the truth is, I don’t think he knows either,” said Brusuelas, echoing a line Trump used about President Joe Biden in his July debate with the then-presumptive Democratic nominee before Biden dropped out of the race.
Brusuelas cautioned that while a candidate can get away with making radical threats, a president must deal with global financial markets. He said Trump’s tariff plan, if enacted, would risk setting off a market panic like former UK Prime Minister Liz Truss did in 2022. Her misjudged tax proposals made her deeply unpopular, and she quickly resigned, making her the shortest-serving prime minister in British history.
“If they ever tried this, they would see a swift and violent reaction from the US bond market. It would engineer a Liz Truss-type moment where global investors express a loss of confidence,” said Brusuelas.
Still, some business groups are bracing for a return of “Tariff Man,” a nickname Trump gave himself.
“We have to take the former president very seriously. He has a track record,” said Matt Priest, the president and CEO of the Footwear Distributors & Retailers of America, an industry trade group. “We are spending a lot of time coaching our members about how to prepare for the impact of these proposals.”
The ironic thing about Trump’s 100% tariff idea is that some experts worry threats like this could encourage countries to find an alternative to the dollar – the exact opposite of Trump’s stated aim.
“The kind of rhetoric Trump is throwing around is the fastest route to get countries to stop using the dollar,” said Obstfeld, the former IMF economist.
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