(AFP) – US President Donald Trump promised tariffs and taxes on other countries Monday after being sworn in, although he held off announcing any immediate measures. Since his election victory, Trump has taken aim at foreign allies and adversaries alike, raising the prospect of fresh levies to push other countries towards tougher action on US priorities.
Early Monday, Trump vowed: “I will immediately begin the overhaul of our trade system to protect American workers and families.” “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump added in an inaugural address as president. Before his White House return, Trump vowed to impose 25 percent tariffs on Canadian and Mexican imports, and an additional 10 percent on Chinese goods, if they did not do more about illegal immigration and the flow of fentanyl into the United States.
On the campaign trail, Trump also floated the idea of added duties on all imports and steeper rates — 60 percent or more — on Chinese goods. But he stopped short Monday of unveiling new tariffs. These are paid by US importers to the government on purchases from abroad, with the economic weight of levies falling on importers, foreign suppliers, or consumers.
– ‘America First Trade Policy’ –
Trump also on Monday signed a directive for all federal agencies “to address the cost-of-living crisis that has cost Americans so dearly,” calling for action to lower housing costs and others. The White House added in a notice that Trump would unveil his “America First Trade Policy.” The European Union’s economy commissioner said the bloc stood ready to defend its interests, while Canada’s Foreign Minister Melanie Joly said Ottawa would work to ensure it is ready to respond to US trade policies.
Trump also reiterated his plan to set up an “External Revenue Service” to collect tariffs, duties, and revenues, promising “massive amounts of money” pouring in. The name is a play on the Internal Revenue Service, which administers and enforces US tax laws. Some analysts have warned that tariff hikes would bring higher consumer prices and weigh on GDP. A 2021 literature review by the Tax Foundation found that consumers and businesses tended to bear the burden of recent tariffs, although these did not appear to drive economy-wide inflation.
But Trump’s supporters have pointed to other proposals like tax cuts and deregulation as ways to spur growth. Trump’s Treasury secretary nominee Scott Bessent told lawmakers last Thursday that he disagreed the cost of tariffs would be borne domestically. And Commerce secretary nominee Howard Lutnick told Trump’s supporters in Washington that if firms wanted to avoid duties, they should build factories in America.
Trump also said he would establish a new “Department of Government Efficiency.” The office, dubbed DOGE, to be led by Elon Musk and businessman Vivek Ramaswamy, has an advisory role but is eyeing some $1 trillion in federal spending cuts. But Ramaswamy has reportedly decided to step aside and run for governor of midwestern state Ohio.
– Beiyi SEOW
© 2024 AFP
