Donald Trump’s 2024 tariff proposal: Sweeping import taxes to revive US manufacturing; energy prices in focus

As the 2024 presidential election approaches, Republican candidate Donald Trump is doubling down on his promise to revive U.S. manufacturing by imposing sweeping tariffs. Trump argues that tariffs will generate billions in revenue, pressure foreign countries like China, and push businesses to shift production back to the US, as per a report by The Avery Journal Times.

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The case for tariffs

Trump has long pitched tariffs as a tool to bolster the U.S. economy and rein in trade imbalances. “Other countries are going to finally, after 75 years, pay us back for all that we've done for the world,” Trump said during a September debate with Democratic nominee Kamala Harris. Speaking at a Michigan rally, he described tariffs as “the most beautiful word," as quoted by The Avery Journal Times.

He has vowed to impose a universal tariff of 10% to 20% on all imports, with a 60% levy on Chinese goods and a potential 200% tax on automobiles made in Mexico. Trump insists these measures will protect American jobs and reduce the trade deficit, as per The Avery Journal Times report.

Manufacturing challenges

Trump’s tariff plan aims to push production back to U.S. soil, but experts are skeptical about the feasibility of this shift. "We haven't made TVs in the US in decades," Handley said, noting that U.S. factories currently lack the capacity to meet consumer demand on a large scale.

Though Trump claims that his earlier tariffs did not fuel inflation, economists argue otherwise. Handley estimates that supply chain disruptions from previous tariffs effectively acted as a 2% to 4% price increase, forcing companies to pass on some of those costs to consumers.

A 2019 study in the Journal of Economic Perspectives found that by the end of 2018, U.S. consumers and importers were paying an extra $3.2 billion per month due to added tariff costs.

Trump’s aggressive tariff policies could significantly alter global trade flows. Oxford Economics forecasts that U.S.-China trade could shrink by 70%, with total U.S. trade volumes falling by 10% as companies seek alternative markets and shift toward North American trade partners.

Although Trump projects that new tariffs could generate up to $500 billion in annual revenue, economists believe the actual figure could drop to around $200 billion due to the diversion of trade from China. Additionally, Trump’s proposal to revoke China’s “permanent normal trade relations” status could increase US inflation by 0.4 percentage points in 2025, according to PIIE.

Energy and food prices in focus

In his campaign, Trump has pledged to cut energy bills in half within a year, aiming to tackle voter concerns about inflation. Analysts, however, remain doubtful. Yaros noted that greater domestic oil and gas production, which Trump links to deregulation, may be limited by market forces. “Producers have shareholders to answer to,” he said, suggesting production increases may not materialize quickly, as quoted by The Avery Journal Times.

Trump also wants to lower food prices by reducing imports of foreign agricultural goods, but economists warn that such restrictions could prompt retaliatory measures from trade partners, potentially hurting U.S. consumers, as per The Avery Journal Times report.

While Trump promises to reduce inflation and boost the economy, experts say the effects of his proposed tariffs and trade policies remain uncertain, with higher consumer costs and global trade disruptions likely to complicate his plans, The Avery Journal Times report added.