In his election platform, Donald Trump promised two major economic reforms: increasing customs duties on all imports without exception, and reducing corporate taxes from 21% to 15%.
The increase in customs duties on imports can range from 10% to 20%, and for Chinese products it can reach 60%.
At one of his campaign rallies last September, Trump revealed a plan to impose tariffs of up to 100% on countries that attempt to trade outside the dollar-based financial system, with the aim of protecting the dollar’s global standing.
Bloomberg Economics economist Andrei Isakov commented on this, saying: “We have not witnessed such high customs duties in the history of the United States, and our estimates indicate that this blow will fall primarily on the United States’ share in international trade, as the decline in trade between China and the United States will lead to a reduction in the United States’ share of international trade from 20% in the late 2000s to 8.5% in the next five to seven years.”
He added: “The blow to the partners of the United States and other countries will also be uneven, and the countries neighboring the United States will suffer the most, as Mexico and Canada are expected to lose up to 2% of their gross domestic product over four years.”
Bloomberg also indicated that measures such as these may cause great harm to the Chinese economy, as Trump’s plans to increase duties to 60% on Chinese products may destroy trade between the two countries, while Europe will find itself forced to strengthen its economic independence.
Source: Bloomberg
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**Interview with Economist Andrei Isakov on Trump’s Proposed Tariffs**
**Interviewer:** Thank you for joining us, Andrei. Let’s dive right in—Donald Trump’s election platform includes significant economic reforms, particularly increasing tariffs on imports and cutting corporate taxes. What potential impacts do you foresee on the U.S. economy if these proposals are implemented?
**Isakov:** Thanks for having me. The proposed tariffs, especially on imports from China, could be unprecedented in U.S. history. Our analysis suggests these measures might severely limit the United States’ share of international trade, potentially dropping from 20% to 8.5% in the next five to seven years. This not only jeopardizes the U.S. economy but also sends shockwaves through the global marketplace.
**Interviewer:** That’s quite alarming. You mentioned that neighboring countries like Mexico and Canada could also be affected, with potential GDP losses of up to 2%. Could you elaborate on how these countries might feel the repercussions?
**Isakov:** Absolutely. As key trade partners, any disruption in trade flows due to high tariffs will likely result in significant economic hits for both Mexico and Canada. They’ll face challenges such as reduced exports to the U.S. and adjustments in their own economies to compensate for lost trade revenue.
**Interviewer:** And what about China? Trump’s proposed tariffs could potentially reach 60% on Chinese goods. How would that reshape the U.S.-China relationship and China’s economy in particular?
**Isakov:** The implications are substantial. Such high tariffs could effectively dismantle much of the trade relationship between the two nations. We estimate that such measures could lead to a 0.68% reduction in China’s GDP, which would not only affect its economy but could also escalate tensions between the U.S. and China, impacting geopolitical dynamics.
**Interviewer:** Given these predictions, do you think there will be a broader economic fallout? For instance, could these tariffs lead to a slowdown in global economic growth?
**Isakov:** Yes, indeed. The interconnectedness of global markets means that any significant disruption in U.S.-China trade will have ripple effects worldwide. Other economies may struggle with diminished trade volumes, potentially leading to a slowdown in global economic growth. Europe, for example, may feel pressured to increase its economic independence, which could further fracture global trade relations.
**Interviewer:** This raises an interesting point for debate. Given the potential consequences, do you think the American public will support these tariffs, or could they face backlash due to the anticipated negative outcomes?
**Isakov:** That’s the crux of the matter. While some may see tariffs as a means to protect American jobs and industries, the broader economic and international repercussions suggest a complex decision for voters. How the public weighs immediate economic benefits against long-term risks will undoubtedly shape the election’s outcome.
**Interviewer:** Thank you, Andrei, for your insights. It’s certainly a topic that deserves further discussion as we approach the election.
