Former President Donald Trump has used tariffs as a key weapon in his trade war strategy. However, some experts are concerned about his recent threat to impose staggering tariffs on countries that snub the US dollar. Trump made this threat during a rally in Wisconsin, vowing to put a 100% tariff on goods from countries that move away from the dollar, in response to efforts by countries like China and Russia to find alternatives to the US dollar as a reserve currency. While protecting the dollar may sound good on the campaign trail, experts warn that such massive tariffs could have negative effects on the American people.
While it is unclear under what conditions Trump would impose 100% tariffs, experts believe that such high levies would lead to price increases on imported goods, resulting in inflation that could negatively impact consumers. Despite these warnings, some support Trump’s tariff proposal, claiming that it will fuel growth, drive down inflation, and protect American workers. Critics, however, view this threat as incoherent and potentially damaging to the economy. Trump’s campaign has not provided details on how such tariffs would be implemented or what would trigger them.
Economists warn that high tariffs, like those proposed by Trump, would pose a significant risk to the economy, potentially increasing the likelihood of a recession. While Trump has dismissed concerns about his trade agenda leading to inflation, studies have shown that American consumers and industries bear the brunt of tariffs. Even experts at institutions like the University of Pennsylvania’s Wharton School, where Trump attended, agree that such tariffs would be inflationary. However, Trump has claimed that many Wharton professors support his plan, though the school has not confirmed this.
Political and economic analysts view Trump’s threats of imposing a 100% tariff as radical and potentially damaging to global financial markets. Such actions could lead to a market panic and a loss of confidence from investors, similar to the situation that led to the resignation of former UK Prime Minister Liz Truss. Business groups are preparing for the return of “Tariff Man” as Trump continues to push for aggressive trade policies. Some experts worry that Trump’s rhetoric could backfire and actually encourage countries to find alternative reserve currencies, which would go against his stated goal of protecting the US dollar. Overall, there are mixed opinions on the potential impact of Trump’s tariff threat, with concerns about negative consequences for the economy and global markets.
