Republican presidential candidate former US President Donald Trump speaks at a campaign rally at the Johnny Mercer Theater in Savannah, Georgia on September 24, 2024.
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Donald Trump, who has doubled down on his trade policy with tariffs, appears to have shifted the focus of his protectionist agenda from China to some of the US’s closest allies.
Speaking at a campaign event in Savannah, Georgia, on Tuesday, the Republican presidential candidate said he would build on the tariff policies of his first term in an effort to take manufacturing jobs from foreign countries — friends and foes alike.
“You’re going to see a mass exodus of manufacturing from China to Pennsylvania, from Korea to North Carolina, from Germany to here in Georgia,” he said in his mostly economic speech.
“I want German car companies to become American car companies, I want them to build their factories here,” he added.
In his first term, Trump had imposed billions of dollars worth of tariffs on Chinese goods as part of efforts to correct what he saw as an unfair trade balance. Trump has said he would consider imposing new tariffs on imports from the country at rates of 60 percent or higher.
US allies could become a key target of Trump’s “America First” policy, which increasingly groups European and Asian partners together with rival China. The former president has proposed blanket tariffs of up to 20% that would hit imported goods from all countries.
“We’ve been treated so badly, mostly by allies … our allies actually treat us worse than our so-called enemies,” Trump said in a rally in Wisconsin beginning of this month.
“Militarily, we protect them and then they trade us. We’re not going to let that happen anymore. We’re going to be a tariff nation,” he added.
The comments echoed remarks Trump made about Taiwan earlier this year, when he accused it of taking “about 100 percent” of the U.S. chip business. He also said the democratically-ruled island must pay the US for its defense.
Trump has long sought to put economic and diplomatic pressure on US allies, accusing “free riding” and his recent statements signal he is doubling down on that approach, said Nick Marro, Lead for Global Trade at Economist Intelligence.
Experts said Japan is also worried about what could be another “transactional” Trump Presidency and 100% invoice references. on certain car imports. “Will that include the Japanese automakers? So there’s a lot of uncertainty here right now about what the next five years might look like,” author William Pesek told CNBC’s “Squawk Box Asia” in July.
“One of the most dangerous aspects of Trump’s propensity for tariffs is that other countries will not take these actions sitting down. Retaliation by other U.S. trading partners — whether through reciprocal, retaliatory tariffs or other non-tariff measures — is a likely consequence of all of this,” Marro said.
Trump also said Tuesday that he plans to build his “manufacturing renaissance” by implementing corporate tax cuts, creating low-tax special economic zones and tax breaks for companies that move production to the US.
“These policies could potentially attract some manufacturers back to the US, particularly for industries sensitive to trade barriers,” said Stephen Weymouth, professor of international political economy at Georgetown University.
“However, these plans are unlikely to bring widespread renewal of industries, given the complexity of global supply chains and higher labor costs in the US,” he added.
Economist Stephen Roach also told CNBC that Trump’s tariffs will hurt America’s trading partners while only raising the cost of goods for American consumers and manufacturers. This is consistent with me mainstream economic opinion on invoices.
“U.S. manufacturers that rely on foreign parts and components would take a double whammy — their inputs would be more expensive because of Trump’s tariffs and their exports would be more expensive because of the retaliation,” said William Reinsch, Scholl President at International Business. at the Center for Strategic and International Studies.
Trump, however, has argued that other countries will foot the bill. “I’m not raising your taxes, I’m raising the taxes of China and all these countries in Asia and around the world, including the European Union, which is one of the most egregious,” he said at his rally in Wisconsin.
Reinsch said the tariffs, if implemented, would also represent a clear break between long-standing US trade policy and mainstream economic thinking.
Particularly in dealing with China, the current Biden administration has relied heavily on a coordinated approach with like-minded partners such as Japan and the Netherlands to impose trade restrictions.
While the Biden administration has kept most of Trump’s tariffs on China and even increased levies on certain high-tech industries, Reines described the difference between the two’s approaches to trade restrictions as “the Trump vs. Biden/Nisteri sledgehammer of Harris”.
However, the extent to which Trump’s tariff proposals are genuine or more of a threat has also been the subject of debate.
In one interview on CNBC TV18 Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co, said in a statement on Tuesday that some of Trump’s top advisers told him the proposed tariffs were more of a negotiating tactic for favorable trade deals than an expected outcome.
