- Donald Trump did not immediately impose tariffs on Inauguration Day, despite his campaign promises.
- But he vowed that future tariffs would lead to “massive amounts of money” flowing into the US Treasury.
- Trade experts have said the sweeping tariffs could raise prices for consumers and fuel inflation.
President Donald Trump is officially back in the White House and one of his top priorities is tariffs and trade.
While no tariffs were officially imposed on January 20, Trump announced during his inauguration speech that he plans to create the Foreign Revenue Service. which would collect fees, duties and revenues. He said this agency would lead to “massive sums of money” going into the US Treasury. Trump first announced his plans to create the Foreign Revenue Service on January 14.
“Instead of taxing our own citizens to enrich other countries, we will tax and tax foreign countries to enrich our own citizens,” Trump said during his inaugural address.
Details of the plan are unclear, and the creation of a new agency requires approval by Congress.
In a second Inauguration Day speech, Trump reiterated his plan to implement the new tariffs before signing a slew of executive orders, including a federal hiring freeze, a back-to-the-office mandate for federal workers and an order to withdrawal of the United States. from the Paris Climate Agreement.
“Tariffs are going to make us rich as hell,” Trump said. “It will bring back our country’s businesses.”
During the campaign, broad tariffs were a cornerstone of the president’s platform. He proposed a 60% tariff on all goods imported from China, along with a 10% to 20% tariff on all imports from other countries.
In November, Trump said he would “sign all necessary documents” to impose a 25% tariff on goods imported from Mexico and Canada on his first day in office unless the countries their shot migration and drug policies. He also announced an additional 10% tariff on all goods imported from China, on top of the tariffs he had already proposed.
A month later, Trump also threatened the BRICS group, which is made up of nine countries including Brazil, Russia, India and China, with a 100% tariff on imports from those countries unless they commit to not creating another competing currency. with. the US dollar.
Trade industry experts previously told Business Insider that Trump’s tariff proposals could cause prices of affected goods to rise, causing consumers to pay more for products like electronics or clothing. creating a form of consumption tax.
A number of companies have already announced they were preparing to raise prices in anticipation of the tariffs. Some economists have also predicted that the broad tariffs could increase inflation, prompting the Federal Reserve to raise interest rates.
Trump has denied that his tariff proposals would hurt the economy and consumers, saying during a speech in August that his plans “are not about taxes on us. This is a tax on another country.” However, many economists have argued that the costs of tariffs can mainly fall on American consumers; The left-leaning Center for American Progress estimated that the president’s trade plans could cost the typical American family an extra $1,500 a year.
Brian Hughes, a Trump-Vance transition spokesman, told BI that Trump “has promised tariff policies that protect American manufacturers and working men and women from unfair practices by foreign companies and foreign markets.”
“As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation,” Hughes said.
How the tariffs will affect consumers and the economy
Trump implemented tariffs during his first term, which did not significantly affect inflation. However, some economists predict that his proposals this time could have a greater impact on the economy given their broader scope. For example, the nonpartisan Peterson Institute estimated that Trump’s 60% tariff on imported goods from China would increase inflation by 0.4 percentage points in 2025.
During Trump’s inauguration speech, he touched on inflation concerns, which he blamed on government overspending and high energy prices. He pledged to lead members of his cabinet to fight inflation and lower prices by focusing on expanding domestic energy supplies, particularly oil and gas, and increasing domestic production.
“Today, I’m also going to declare a national energy emergency. We’re going to drill, baby, drill,” Trump said.
It is unclear how quickly consumers could see the tariffs translate into higher prices for goods or whether a drop in energy prices could counteract the effect.
In a recent report, the National Retail Federation predicted that Trump’s tariff plans would raise prices on clothing and footwear, furniture and appliances. An October report from the Consumer Technology Association estimated that the proposed tariffs would increase the costs of laptops and tablets by 45%.
“It’s hard to say right now at what point consumers would feel the impact,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, previously told BI.
“It may also depend on individual companies and what their rate mitigation plans are and how much they can try to reduce the impact on consumers,” Gold added.
Trump’s tariffs could also face legal challenges over possible violations of the US-Mexico-Canada agreement, a free trade deal negotiated by Trump in his first term that took effect in July 2020.
