Tariffs are likely to stay high even if Harris wins. But Trump could send them into the stratosphere.
11/03/2024 22:33
Perhaps one of Donald Trump's most remarkable accomplishments during his last term was how he reoriented the political landscape around trade. The decision facing voters is whether he will be able to upend the status quo again.
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One of Donald Trump's most remarkable accomplishments in office was how he reoriented the political landscape around trade and tariffs, ushering in a new era of higher duties that have persisted and even grown slightly during the Biden administration.
The decision facing voters in this election is whether he will be able to upend the status quo again.
Vice President Kamala Harris and her aides have offered little detail on her trade plans, but if she makes any moves at all, she is widely expected to keep the Trump-created new normal of higher duties in place — with a possible focus on new duties on "strategic sectors."
Trump, by contrast, is promising a new wave in the ballpark of 10 times the level of tariffs he put in place in his first term, experts said, with a plan that includes across-the-board tariffs of 10% or higher and 60% tariffs on China.
He is also promising things like a Trump Reciprocal Trade Act that would automatically put tariffs on nations in response to their duties on the US.
The effects would be felt across American life, even if Trump delivers on just a fraction of his promises.
One thing that appears off the table, at least for now, is a lowering of duties anytime soon.
"Cutting tariffs is not in the cards for anybody," Richard Baldwin, a professor of International Economics at the International Institute for Management Development, said in a recent interview.
Baldwin added of Trump's promises that "I think we have to take him at his word," noting that he has the power to levy his tariff regime unilaterally.
For Harris, a likelihood of maintaining the 'new normal'
During his term in office, then-President Trump imposed duties on a wide array of products from China as well as things like aluminum and steel products from Europe and Asia.
It marked about $80 billion in new duties, which companies pay at US ports of entry.
The Biden administration largely left Trump's tariffs in place and even announced new duties this May on "strategic sectors" such as semiconductors and electric vehicles.
Harris is expected to continue this general approach and has unveiled a reindustrialization strategy aimed at encouraging specific sectors in the US — from aerospace to AI to quantum computing to critical minerals.
Her focus has not been on any new tariffs at campaign stops but instead on government inducements for certain industries, similar to Biden-era accomplishments like the Bipartisan Infrastructure Law and the CHIPS and Science Act focused on semiconductors.
Biden's and Harris's aides have long pointed to a recent boom in US factory construction as evidence their approach is the one that works.
Harris has also been critical of Trump's plans for new tariffs, likening them to a national sales tax that she said would add over $3,900 to a typical family budget, as companies that pay the duties pass along the tariff taxes to the final consumers.
Read more: Trump vs. Harris: 4 ways the next president could impact your bank accounts
But the politics around tariffs could forestall any efforts to roll back existing duties, which notably poll well, especially in certain swing states.
"If she wins, she won't win because of California," William Alan Reinsch of the Center for Strategic and International Studies said in a recent interview, citing Harris's home state where tariffs are less popular.
"She'll win because of Pennsylvania, Michigan, and Wisconsin, and the trade politics there haven't changed," he added, noting the widespread support for existing duties on things like steel, aluminum, and autos.
"She brings a different mentality to the job," he said of her California background as well as of the selection of Tim Walz from agriculture-dependent Minnesota, which was hit hard during Trump's first round of tariffs.
"But it doesn't change the politics."
When it comes to Trump, the former president has a record of keeping his trade promises and is pledging what would be historic duties.
Trump calls tariffs "the most beautiful word in the dictionary" and has even floated things like 2,000% tariffs on autos and said his aim in some areas is to implement "the highest tariff in history."
Perhaps the only question, with Trump likely able to cut Congress out of the loop and pursue his policies unilaterally, is whether courts intervene.
Read more: What are tariffs, and how do they affect you?
A recent analysis from Reinsch and Warren Maruyama, a former general counsel at the US Trade Representative, laid out the extensive authorities that allow presidents to impose tariffs on their own.
Another analysis from Alan Wolff at the Peterson Institute for International Economics warned of underestimating Trump's tariffs. He noted the unilateral powers a president enjoys and the unprecedented levels tariffs could reach.
The effect "on the economy, on businesses, and on individual consumers and workers would literally be incalculable," he wrote.
That leaves the courts, where past challenges to Trump's tariffs haven't been successful. That could change depending on how vigorously Trump tried to pursue a potential second-term agenda.
"No matter what he does, he'll be sued," Reinsch said, adding that perhaps the easiest legal path for Trump would be to begin with his plan for 60% tariffs on China.
"You declare an emergency, and you use the International Emergency Economic Powers Act," he noted, adding, "It works better when there's a targeted offender."
Baldwin added that political repercussions could be the only check on Trump's agenda.
He predicts that only those 60% tariffs on China could "lead to an inflation surge, especially on the middle class. That makes the last couple of years look like a small thing."
And that's even before China retaliates, he added, which "could do a lot of damage."
Ben Werschkul is Washington correspondent for Yahoo Finance.
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