What are the implications of Trump's high tariff threats?
US President-elect Donald Trump has announced that as soon as he takes office in January he plans to impose tariffs of 25 percent on imports from neighbouring Mexico and Canada and increase the current tariffs on Chinese imports by 10 percent. With these measures he aims to boost the US economy and exert pressure on these countries to combat illegal migration and drug trafficking. Europe's press is not convinced.
Heading towards crony capitalism
Der Standard fears:
“As star economist and columnist Paul Krugman has written in the New York Times, the US government can basically impose as many tariffs as it likes, but it can also grant exceptions at any time. Trump will use this to reward allies and punish enemies, Krugman writes, adding that as president he often showed that he was ready to do this using other measures. This kind of crony capitalism, in which proximity to power is more important for companies than innovative products and good management, would soon make the US look like Russia and jeopardise its prosperity in the long term. That, too, would not be good news for Europe.”
Simplistic scapegoatism
Isolationist policies are a serious mistake, Le Temps explains:
“Globalisation has fallen out of favour. It has increased inequalities in the world and is partly responsible for global warming. This is only a tiny part of the bigger picture, but it is precisely what Donald Trump rode on during his campaign, promising, with his favourite phrase, to make America great again by barricading it behind its borders. Walls, new laws and tariffs: a simple method, combined with the equally simplistic promise that all or almost all problems are imported. And that reducing these imports will solve the problems. ... But it's a mistake to believe that all-out protectionism is the solution.”
This could backfire
The Times doubts that Trump's plan will work:
“Although some American firms would benefit from protection from imports, many industries are integrated across the North American continent, so a tariff on imports of, for instance, car parts will raise costs for carmakers in America. Canada accounts for 60 per cent of America's crude oil imports, so tariffs will increase the cost of energy. Since inflation was the single most important factor in turning voters against Joe Biden, pushing up prices risks denting Trump's popularity. It will also make it harder for him to fulfil his promise to cut America's mountainous national debt.”