To hear President-elect Donald Trump tell it, trade wars are good and easy to win. And he plans to wage new trade wars — against American allies and adversaries alike — as soon as he enters the White House.
Trump has talked about placing higher tariffs on all imports, from every country, in a bid to boost domestic industries. He sees tariffs, which often result in higher prices for American consumers, as potent negotiating tools. This week, he promised to impose hefty 25% tariffs on all products from Canada and Mexico despite having spent much of his first term updating a trade agreement with those countries.
If he follows through, the new fees would have far-reaching effects. Canada, Mexico and a third country Trump often threatens with higher tariffs — China — are America’s top three trading partners. New tariffs would hike operating costs for foreign companies, which would likely pass along at least some of that burden to consumers. Many American manufacturers rely on products from Canada and Mexico in their supply chains, too, meaning domestic industries would also face uncertainty and higher prices.
Still, Republican lawmakers told NOTUS they support the move because Trump knows how to strike deals, even if it means Americans take a financial hit in the near term.
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“The tariffs will incentivize manufacturers to invest in AMERICAN made products,” Rep. Ralph Norman texted NOTUS on Tuesday. “I assume those products currently unavailable in the US will have exemptions in place for a limited time period.”
Rep. Marc Molinaro of New York told NOTUS he sees the announcement as “a powerful message: stop the flow of fentanyl and illegal immigrants into this country.”
Tariffs, Rep. Tim Burchett of Tennessee said in a text message, bring other countries “to the table. A businessman like Trump gets it.”
Rep. Andy Ogles also praised Trump, saying in a text that the “government of Mexico has been complicit in allowing the largest human trafficking operation in history.”
Rep. Don Bacon of Nebraska likewise supports the move. “Mexico deserves this because they are blocking our corn exports,” he told NOTUS. “They also must do more to support our border security.”
But trade wars are usually messier — and more painful — than the quick, easy victory envisioned by Trump and his allies. Republican Hill staffers are slightly more likely to acknowledge that than their bosses. One trade expert who works in a GOP House office wondered in an email to trade groups whether Trump really means all or most products from Canada and Mexico. In the email, obtained by NOTUS, this staffer also wondered what legal authority Trump would use, pointing to the International Emergency Economic Powers Act as the most likely tool.
During Trump’s first term, American consumers and many U.S. companies paid higher prices for some items after he slapped tariffs on metals and other products from around the globe. Some American exporters also felt the pain of retaliatory tariffs from other countries later, prompting the U.S. government to approve billions of dollars in relief for hard-hit farmers.
Nick Iacovella, a spokesperson for the tariff-supporting advocacy group Coalition for a Prosperous America, dismissed the severity of potential price hikes.
“There’s always about an 18-month period of price increase,” he said of new tariffs, “but it’s very marginal.”
And, he told NOTUS, “what do you get as a result of that price increase, if there is one? You get increased domestic production.”
Tariffs on steel and aluminum during Trump’s first presidency are believed to have led the average price of those metals to increase in America by 2.4% and 1.6%, respectively, according to an in-depth report from the U.S. International Trade Commission. Both domestically produced metals and imports saw higher prices. Domestic steel and aluminum prices increased by roughly 0.7% and 0.9% on average annually between 2018 and 2021, while the cost of steel and aluminum imports increased by about 22.7% and 8%, respectively — almost the same percentages as the tariffs.
In the same time period, American production of steel increased by 1.9% and aluminum by 3.6% on average each year, which translates to a $1.5 billion and $1.3 billion boost on average for the domestic steel and aluminum industries. But the same tariffs are estimated to have slowed production in other American industries, such as machinery manufacturing, annually by about $3.4 billion.
Critics point to those numbers, noting that the cumulative effects hurt American productivity even if the tariffs helped some steel and aluminum suppliers.
“Nobody is saying that tariffs can’t protect companies,” Scott Lincicome, a trade expert at the free-market Cato Institute, told NOTUS. “What we’re saying is that in the long term, the companies are no stronger or better than they were pre-tariff.”
But Lincicome doesn’t believe Trump will actually impose these 25% tariffs upon entering office.
“It’s crap, and you can quote me on that,” he said in an interview. “It’s crap.”
He wondered: Is it really a political winner to make avocados more expensive right before the Super Bowl? And what about one of the other top imports from Mexico: beer?
“It is a 97% chance that it’s all theater, that Trump will declare victory at some point in the next two months because of some changes that Canada and Mexico were probably already going to make, or if they are new changes, they’re not actually very substantive,” Lincicome predicted. “And then this will all go away.”
On this issue, many Democrats actually find themselves agreeing with anti-tariff, libertarian-minded people like Lincicome.
“We don’t want Trump’s 20% tariffs on everything from everywhere in the world,” Rep. Raja Krishnamoorthi, the top Democrat on the House select committee on competition with the Chinese government, told NOTUS in an interview last week.
“It hurts our exporters, including farmers in Illinois,” he said. “It also divides our relationships with our friends, partners and allies, whom we need to counter aggression from China.”
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Haley Byrd Wilt and Reese Gorman are reporters at NOTUS.
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