U.S. Economic Policy: Trump Urged to Show Restraint Regarding Tariff Policy
14:00 JST, January 27, 2025
The protectionist tariff policy of U.S. President Donald Trump’s administration, which advocates an “America First” approach, will have a significant negative impact on the global economy. The administration is urged to show restraint through careful consideration.
Viewing U.S. trade deficits as a problem, Trump had expressed his intention to impose a blanket tariff of 10% to 20% on goods imported from the world and an additional tariff of 60% on imports from China, with the aim of protecting the domestic manufacturing industry.
On Jan. 20, his first day in office, he delayed imposing the tariffs, but has instructed relevant agencies that a comprehensive review will be carried out by April 1 on such issues as the chronic trade deficit, unfair trade practices and currency manipulation. Trump is believed to have thought the tariffs should be imposed based on the results of the review.
However, high tariffs will lead to a reduction in trade and have a negative impact on the global economy. If a trade war breaks out as a result of retaliatory tariffs, the situation will become serious. There is also a high probability that it will contribute to increased prices in the United States.
Trump must be facing a dilemma. The tariff policy may appeal to manufacturing workers in the short term. However, if it leads to high inflation, it will instead increase dissatisfaction throughout U.S. society.
There is still more than two months to go. Trump should think about what is truly in the national interest and act accordingly. It will also be important for Japan and other major countries to work tenaciously to encourage him to show restraint.
There are strong views that the purpose of his tariff policy is not just to improve trade imbalances and increase tax revenue, but it is also to be used as a tool to secure deals for other goals.
This is evident in his strong desire to impose a 25% tariff on imports from Mexico and Canada and an additional 10% tariff on China from Feb. 1.
Trump views the influx across the country’s borders of synthetic narcotic drugs, whose raw materials are manufactured in China, and illegal immigrants as problems that need to be resolved.
Canada and Mexico host production bases for the automobile and other industries, not just of Japan but also of the United States, and sophisticated supply chains have been created in the countries. If negotiations over remedial measures do not progress and tariffs are imposed, it is inevitable that there will be major disruptions.
It is desired that Canada and Mexico explore ways to avoid tariffs. Japan, which would be hit hard, should also convey its concerns to the United States.
Meanwhile, Trump has declared a national energy emergency and has repealed a series of measures, including the ban on oil and natural gas drilling and vehicle emissions regulations. The president is also aiming to abolish tax incentive measures for electric vehicles (EVs). It will be important for Japan to carefully examine the impact of these measures.
Energy is an area in which Japan can cooperate. If Japan imports liquefied natural gas (LNG), which the United States is increasing its production of, it can assist in the development of both countries.
(From The Yomiuri Shimbun, Jan. 27, 2025)
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