Trump Proposes Universal Basic Tariff on All Imported Goods

Former President Donald Trump suggests a 10% across-the-board tariff on all imports, sparking concerns about global economic turmoil.

Former President Donald Trump, a prominent figure within the U.S. Republican Party and a potential contender for the next presidential election, has revealed his intention to impose a uniform 10% "Universal Basic Tariff" on all imported goods. This proposal has sparked debates about its potential impact on the global economy, raising concerns about significant disruption if the U.S. were to triple tariffs compared to current levels.

On the 16th of this month, Donald Trump convened economic advisors at his Bedminster Golf Club in New Jersey to discuss economic policies related to trade. Notable attendees included Larry Kudlow, former head of the National Economic Council, and Newt Gingrich, former Speaker of the House. Sources familiar with the meeting indicated that the discussion revolved around the concept of applying a "Universal Basic Tariff" to all imported goods.

In a subsequent Fox Business interview, Trump elaborated on his proposal, stating, "If foreign companies are flooding the U.S. with their products, they should automatically pay tariffs." He voiced his desire to impose a flat 10% tariff on all imports. Close aides have indicated that this proposal could become one of his signature campaign promises.

Trump, known for championing "America First" policies, had previously escalated protectionist measures by imposing high tariffs on items such as solar panels, washing machines, steel, and aluminum shortly after assuming office in January 2017. The Section 201 safeguard tariffs on washing machines specifically targeted South Korean companies Samsung and LG Electronics. In 2018, he initiated a widespread trade dispute with China by imposing tariffs reaching as high as 25% on a broad range of Chinese goods.

Experts speculate that if such a policy were to materialize, it could generate economic turmoil surpassing the disruptions seen during Trump's first term. The average tariff rate in consumer-oriented America is slightly above 3%. Contrary to expectations, the Trump administration's high tariffs on Chinese goods were mostly retained by President Joe Biden, resulting in an average tariff rate of 19% for Chinese imports.

While Trump argues that increased tariffs would offset taxes for American businesses, warnings have emerged about rising costs for companies utilizing imported intermediate goods and potential exposure of exporting businesses to foreign retaliations. Inevitably, consumers would also bear the brunt of price increases.

Adam Posen, President of the Peterson Institute for International Economics, stated that "Universal Basic Tariffs" would "severely constrain American households' choices, impose greater costs on them, and cause millions of job losses." Michael Strain, an economist at the American Enterprise Institute, echoed concerns, likening such policies to "disasters," referencing how protectionism exacerbated the Great Depression in the 1930s.

Newt Gingrich, who attended the discussion on "Universal Basic Tariffs," acknowledged that the concept resembles protectionist policies from the late 19th to early 20th centuries. He admitted that the idea would be controversial, remarking, "While free trade was rational when we had dominant economic power, it's unclear if it's still rational."

As discussions continue, the world watches closely to see whether Trump's proposal gains traction and what implications it may hold for the global economy.