Memorandum

 

FROM:  Becker Team 
DATE:  ​​December 12, 2024​ 
RE:  President-Elect Trump’s Proposed Tariff Policies and Economic Impacts 

 

Introduction: President-elect Donald Trump’s proposed tariff policies strongly focus on economic protectionism and fostering domestic production. These policies include significant tariffs on goods from China, Canada, Mexico, and BRICS nations. The Administration aims to reduce reliance on foreign products, address trade imbalances, and encourage companies to reshore operations.  

 This memo provides an overview of the proposed tariff plans, reactions from the business community and Congress, post-election updates, and relevant appointments in the Trump administration’s trade team.  

Tariff Overview 

 Trump’s Tariff Proposals: 

  • A baseline tariff ranging from 10% to 20% on all imported goods, intended to encourage domestic production and reduce reliance on foreign products. 
  • Specific levies include a 60% tariff on goods imported from China and 20% on goods from other countries. 
  • A proposed 25% tariff on imports from Canada and Mexico aimed at addressing illegal immigration and drug smuggling. This is designed to pressure these countries to address illegal immigration and drug trafficking. Canadian Prime Minister Justin Trudeau has warned of potential retaliation and rising costs for American consumers. 
  • Threats of a 100% tariff on goods from BRICS nations to counter efforts to undermine the U.S. dollar’s status as the global reserve currency. 

Economic Predictions: 

  • Extensive tariffs could lead to higher consumer prices and inflationary pressures, as importers typically pass tariff costs onto consumers. 
  • U.S. households are projected to face an average increase of $1,180 in annual expenses. 
  • Tariffs may disrupt supply chains, particularly in industries like electronics, automobiles, and fresh produce. 
  • Economists warn of potential retaliatory measures from trading partners, potentially escalating trade conflicts. 

Business Community’s and Congress’ Reactions 

Business Community: 

  • U.S. businesses are expressing concern over increased costs and supply chain disruptions. Many companies have expedited shipments and stockpiled inventory in anticipation of higher tariffs early next year. 
  • Others, particularly in manufacturing and retail, are exploring alternative supply chain strategies to mitigate the impact of tariffs. 
  • Long-term shifts in sourcing and production locations may reshape global trade patterns. 
  • Industries such as electronics, footwear, and automobiles are expected to face significant challenges due to increased import costs. 
  • President-elect Trump has emphasized that companies can avoid tariffs by reshoring or relocating production domestically. Benefits of reshoring include incentives such as lower taxes, reduced energy costs, and limited regulations.  
  • Reshoring may also lead to investments in advanced manufacturing technologies to offset labor costs and maintain productivity. 

Congress: 

  • On Capitol Hill, reactions are mixed: 
  • Republican Response: Some Republicans endorse the tariffs as a means to protect American industries and jobs. However, lawmakers from agriculture-heavy states, including several Republican senators, worry about the impact on farmers and the broader agricultural sector. 
  • Democratic Concerns: Many Democrats and business groups warn of potential price hikes and trade conflicts, emphasizing the burden on consumers and businesses. 
  • The Federal Reserve has been encouraged to monitor the economic impact, with some advocating for lower interest rates to offset potential growth shocks. 

Key Appointments in Trade and Commerce 

 

Secretary of Commerce: Howard Lutnick 

  • Background: Lutnick is the CEO of Cantor Fitzgerald, renowned for his leadership in rebuilding the firm after the September 11 attacks. 
  • Role: A staunch advocate of tariffs, Lutnick supports the administration’s “America First” policies, including the proposed 60% tariff on Chinese goods and a universal baseline tariff. 
  • Senate Confirmation: Required. 

U.S. Trade Representative: Jamieson Greer 

  • Background: Greer, an attorney and trade expert, previously served as Chief of Staff to USTR Robert Lighthizer (Trump’s original USTR), where he played a key role in tariff implementation and trade agreement negotiations. 
  • Role: Known for his assertive approach, Greer is expected to focus on tariffs, export controls, and reducing the U.S. trade deficit. 
  • Senate Confirmation: Required. 

Both Lutnick and Greer are expected to play pivotal roles in implementing and negotiating trade policies, including new tariffs and revisions to existing trade agreements. Their leadership underscores a focus on aggressive trade enforcement and recalibrating the U.S. position in global trade.