Trump City: Is the U.S. Headed for a New Era of Protectionism?
During his first term, Donald Trump favored imposing tariffs on foreign goods. While their impact on specific industries was evident, their overall effect on the U.S. economy remained ambiguous.
The data showed they never fully delivered on their promise to create factory jobs, nor did they trigger the avalanche of inflation that critics feared. This time, however, Trump’s tariff threats take on a different tone.
Silence & Uncertainty: Unable to Gauge Trump’s Tariff Strategy
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The president-elect is talking about expansive actions; the sheer scale of these potential trade wars could create profound uncertainty. He didn’t explicitly declare what he plans to takedown and when. What will he do, despite the cost and economic impact unrevealed?
“I mean, there’s going to be more tariffs, that’s clear,” stated Michael Stumo, CEO of the Alliance for a Prosperous America, an organization that supports import taxes to bolster domestic manufacturing.
Trump recently announced on social media his intention to impose a 25% tariff on all imports from Mexico and Canada. These tariffs would remain in place until these countries successfully curb illegal immigration and the inflow of illegal drugs like fentanyl.
These measures could fundamentally undermine the United States-Mexico-Canada Agreement negotiated by Trump’s own team during his first term. Trump added that Chinese imports would face an additional 10% tariff before Beijing cracks down on the production of fentanyl precursors.
Retaliation Looms: A Dance Between Tariff Threats and
Economic Concerns
Business groups swiftly warned that widespread tariffs could lead to a surge in inflation. Mexican President Claudia Scheimbaum declared she would fight back by imposing tariffs on American goods. Meanwhile, House Democrats rushed through a bill aimed at eliminating the president’s authorization for these sweeping tariff hikes, fearing they will inevitably increase costs for everyday items like cars, shoes, housing, and food.
Scheinbaum emphasized his administration is already drafting a list of potential retaliatory tariffs “if necessary.”
He explained, “The Ministry of Economy is preparing. If there are tariffs, Mexico will raise them, which is a technical task that is also good for Mexico,” suggesting that Mexico would impose specific import duties on sensitive U.S. industrial products.
In the United States, Democratic representatives also introduced a bill requiring congressional approval for imposing national emergency tariffs. The move, however, appears largely symbolic, given the impending Republican control of the House and Senate. The measure would allow Congress to curtail this broad emergency power. “This legislation will allow Congress to limit this broad emergency power and establish necessary congressional oversight before any president, whether a Democrat or Republican, can pass tariffs that indiscriminately increase costs for the American people,” stated Representative Susan DelBene, summarizing the bill’s intent.
But for Trump, tariffs are a familiar, proven lashing his haters within. It appears less politically controversial now Natalie is a majority of #1 voter. Despite its undefined impact on inflation”, conceded Democratic President Joe Biden, who chose to continue imposing tariffs on Chinese Prodigy during his own first term. The Biden administration even expanded tariffs and restrictions on the world’s second-largest economy. However, Biden administration critics dwindled, claiming that rolling back Trump’s tariffs might not effectively address the inflation fears that sparked the initial political showdown.
Stumo argues that these tariffs were initially so “new and unique that they scared everyone in 2017”
How would increased tariffs on goods from Mexico and Canada impact the USMCA?
## Trump City: Is the US Headed for a New Era of Protectionism?
**Host:** Welcome back to the show. Today we’re diving into the potential for a new era of protectionism in the US with President-elect Trump’s recent tariff pronouncements. Joining us is Michael Stumo, CEO of the Alliance for a Prosperous America, an organization that supports the use of tariffs to bolster domestic manufacturing. Mr. Stumo, thanks for being here.
**Stumo:** Thanks for having me.
**Host:** Let’s jump right in. President-elect Trump has announced some sweeping tariff proposals, including a 25% tariff on goods from Mexico and Canada until they address immigration and drug trafficking. These tariffs could significantly impact the USMCA, a trade agreement Trump himself helped negotiate. What’s your take on this strategy?
**Stumo:** I believe it’s a strong move to protect American jobs and industries. [[1](https://www.cnbc.com/2024/11/07/trumps-tariff-plan-how-tariffs-work-why-they-might-increase-prices.html)]While some fear retaliation and increased prices, we have to remember that trade should be fair. These tariffs are designed to level the playing field and incentivize our trading partners to address critical issues impacting the US.
**Host:** Critics argue that these tariffs could lead to a trade war, increase costs for consumers, and ultimately harm the US economy. How do you respond to those concerns?
**Stumo:** We’ve seen in the past that tariffs can be effective tools for renegotiating trade deals and securing better terms for American workers. It’s a matter of strategic negotiation. While short-term adjustments might be necessary, the long-term benefits of a more robust and fair trading system will outweigh any potential drawbacks.
**Host:** Some business groups have voiced concerns about the potential for inflation, pointing to the potential increase in costs for everyday goods. What are your thoughts on this?
**Stumo:** While I understand the concerns, I believe they are overstated. American businesses are resilient and adaptive. They will find ways to mitigate the impact of these tariffs, and the benefits of stronger domestic production will ultimately outweigh any temporary price increases.
**Host:** Mr. Stumo, thank you for sharing your insights.
**Stumo:** My pleasure.