Trump's economic team discusses gradual tariff increase plan
Members of President-elect Donald Trump's economic team are reportedly discussing a plan to gradually increase tariffs, according to a report from Bloomberg, citing people familiar with the matter. The approach aims to enhance negotiation leverage and prevent a sudden surge in inflation. The proposal is in its preliminary stages and has not yet been presented to Trump.
The plan involves a schedule of graduated tariffs, which would increase by approximately 2% to 5% each month. The proposed tariff increases would be implemented under the executive authorities of the International Emergency Economic Powers Act.
The team working on this plan includes Scott Bessent, the nominee for Treasury Secretary, Kevin Hassett, who is set to be the director of the National Economic Council, and Stephen Miran, the nominee to lead the Council of Economic Advisers. The sources requested to remain anonymous due to the internal nature of the discussions.
During the 2024 presidential campaign, Trump suggested minimum tariffs of 10% to 20% on all imported goods, and 60% or higher on shipments from China. Since his election victory in November, there have been multiple reports on how aggressively he plans to implement tariffs. However, Trump has dismissed one report of a measured rollout as false.
The S&P 500 Index dropped below its November 5 level, just before Trump's election, earlier Monday, but later rebounded. Investors have been selling off Treasuries due to fears that inflation will persist, partly because of new tariffs, creating a challenging environment for stocks and the broader economy.
With Inauguration Day just a week away, economists can only speculate about how Trump's trade wars will impact the economy. The International Monetary Fund's Managing Director, Kristalina Georgieva, has stated that tariff threats are already causing an increase in long-term borrowing costs globally. The uncertainty surrounding the incoming administration's trade policies is contributing to global economic pressures.(Cay)
Source: Investing.com
