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The case for Trump's tariffs
What will President-Elect Donald Trump’s election win mean for the US economy? After years of inflation and stagnating wage growth, millions of voters elected Trump off the back of his promise to usher in a “golden age of America.” Trump has vowed to raise tariffs, slash business regulation, and deport millions of undocumented immigrants, policies he says will put Americans first. But what will that mean practically for workers and consumers? On GZERO World, Ian Bremmer is joined by Oren Cass, the founder and chief economist of the conservative think tank American Compass, who thinks Trump’s tariff plan will be a step in the right direction. Many economists argue that Trump's tariff plans will raise consumer prices and spark a global trade war, but Cass argues they're a necessary correction that will incentivize domestic manufacturing, reduce the deficit, and counter China’s unfair trade practices.
“If you actually believe that making things in America matters, then we are going to have to find a way to put a thumb on the scale for getting more of that investment back here,” Cass explains, “And I think that's what a tariff can help do.”
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).
How Trump's tariffs could help (or hurt) the US economy
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).
Graphic Truth: De massive problem with “de minimis” packages
Supporters of the current threshold say it streamlines trade, particularly in a world in which e-commerce is soaring. But critics point out that the US threshold is way higher than anyone else’s, and that foreign exporters often exploit that to evade import duties and inspections.
Chinese e-commerce exporters in particular use de minimis rules to skirt US tariffs, while drug cartels ship fentanyl to the US in a similar way. Someone even tried to import a helicopter from Venezuela by breaking it up into small packages labeled as “personal effects.”
The Biden administration recently cracked down on Chinese exporters’ abuse of de minimis thresholds, and the incoming Trump administration is certain to hit this issue even harder.
Here’s a snapshot of how the US threshold compares globally, along with a look at the massive rise in de minimis shipments to the US over the past 10 years.
Trump's huge holiday tariff threat
The incoming president takes on the US' biggest trade partner.
Watch more PUPPET REGIME!
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U.S. President Donald Trump talks with Canada's Prime Minister Justin Trudeau during a North Atlantic Treaty Organization Plenary Session at the NATO summit in Watford, Britain, December 4, 2019.
Hard Numbers: Trump says Canada should join the US, Ireland’s new government braces for Trump tariffs, Research confirms Kremlin abducted Ukrainian children, Vietnam real-estate tycoon faces death sentence for fraud
1,000: The winners of Ireland’s election last week are scrambling to put together a new coalition government before Donald Trump takes office in January, expediting a process that normally takes months. The rush comes from Irish lawmakers recognizing that they must form a government strong enough to withstand the threat of Trump’s tariffs and protectionist rhetoric. The nearly 1,000 American multinational companies operating in Ireland are by far the biggest contributors to the state’s income and corporate tax bases, leaving the Emerald Isle highly exposed if American companies begin reshoring to avoid tariffs.
314: Research from Yale’s School of Public Health revealed on Tuesday that Russia took 314 children from occupied Ukrainian territories, stripped them of their Ukrainian identity, and put them in the custody of Russian families using the Kremlin’s aircraft and funds. The report asserts that the deportations were part of a systemic, Putin-backed program to “Russify” Ukrainian children.
12.5 billion: A Vietnamese court on Tuesday upheld the death sentence for Truong My Lan, a real estate tycoon convicted of embezzling $12.5 billion. It offered to downgrade the sentence to life in prison if she reimbursed $11 billion, but her lawyers argued she had already repaid the money. The scale of Lan’s deception rattled Vietnam’s economic outlook earlier this year, spooking foreign investors at a time when Vietnam was trying to position itself as an alternative for businesses moving their supply chains away from China.
Participants make their way past the Notre-Dame Cathedral as they attend the 13th edition of the stand up Nautic Paddle race on the river Seine in Paris, France, December 1, 2024.
Hard Numbers: Notre Dame’s stones gleam after cleaning, Trump threatens yuge tariffs, Iceland gets new gov, Vaccine promises AIDS end
42,000: Workers restoring Paris’ Notre Dame Cathedral after the fire that ravaged it five years ago had to clean 42,000 square meters of stone. They used special techniques to minimize damage to the original masonry in the process and the results are stunning: See it for yourself: The medieval cathedral reopens to the public on Dec. 8.
100: President-elect Donald Trump on Saturday threatened to impose 100% tariffs on goods imported from BRICS countries (Brazil, Russia, India, China, and South Africa, as well Iran, Egypt, Ethiopia, and the UAE), should the organization try to issue its own currency or displace the dollar’s place in world trade. It’s an odd threat, as some members – namely Russia and Iran – are already so heavily sanctioned that trade with the US is non-existent, while others – Brazil, Egypt, and the UAE – are major US allies.
15: Iceland’s Social Democrats gained 15 seats in the Althing – one of the world’s oldest parliaments – and will unseat the ruling conservatives after seven years of power following Saturday’s snap election. It’s yet another example of the anti-establishment trend few democracies seem able to escape in this election-studded year.
2: A twice-yearly vaccine against HIV/AIDS has proven 100% effective against contracting the virus, which a UN report for World AIDS Day on Sunday called a “historic crossroads” in the fight to end the epidemic. Generic versions of the drug will be available in 120 low-income countries, mostly in Africa and Asia, but the manufacturer has not approved generic patents for Latin America, which may represent a crucial weak spot in distribution.Mexican President Claudia Sheinbaum speaks after reading a letter to be sent to U.S. President-elect Donald Trump, warning that tariffs would cause inflation and job losses in both countries, at National Palace in Mexico City, Mexico, November 26, 2024.
The economic fallout of Trump’s tariff threats
Last night, Donald Trump made clear that no country will be immune to his tariff agenda. In a post on Truth Social, he accused Canada and Mexico – America’s top two trading partners – of not doing enough to curb the flow of fentanyl and illegal immigration and threatened them each with 25% tariff hikes. He also vowed to impose an additional 10% tariff on China for its role in producing the precursor chemicals for fentanyl.
The announcement caused Mexico’s peso to slide, suffering a 1.7% drop against the US dollar, and for Canada’s dollar to hit a four-year low, dropping 0.7%.
In a press conference on Tuesday, President Claudia Sheinbaum responded to Trump’s threat by arguing that tariffs would not solve the migration or drug crisis and would come at the cost of the auto industry – noting that cars from America’s biggest auto manufacturers are some of Mexico’s principal exports to the US. Auto stocks fell in response to the post – with General Motors down as much as 7% on Tuesday. Canadian Prime Minister Justin Trudeau hopped on the phone with Trump, seizing the moment to show voters he knows how to handle the incoming US president.
Meanwhile, Chinese stocks remained relatively solid – dropping just 0.2% – likely because the 10% tariff was lower than many investors’ worst expectations.
The US economy was also unphased by the news, with the Nasdaq and S&P 500 both making gains in response to Trump appointing hedge fund manager Scott Bessent as treasury secretary. Bessent is expected to be a steward of the stock market and a moderator of Trump’s wildest economic ambitions.
How likely is Trump to follow through? Eurasia Group US analyst Noah Daponte-Smith says it’s hard to predict. “What we do know,” he says, “is that Trump is serious about the tariffs and has the legal means to implement them if he wants.” Even if Trump doesn’t implement them on day one, “the threat of implementation will hang over the USMCA relationship for the entire Trump term if these underlying grievances are not addressed in the manner Trump desires.”President-elect Donald Trump attends the America First Policy Institute gala at Mar-A-Lago in Palm Beach, Florida, on Nov. 14, 2024.
Hard Numbers: Trump talks tough tariffs, Opposition wins in Uruguay, DHL plane crashes in Lithuania, Israeli drone targeted journalists, Ireland asylum claims spike
25: President-elect Donald Trump took aim at Canada and Mexico via Truth Social on Monday, posting about his plan to charge the countries — currently America’s No. 1 & No. 2 trading partners, — a whopping 25% tariff on all products entering the US. The tariff would be enacted on Jan. 20, 2025, Trump said, and would “remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” He then posted that he would charge China, where the precursor chemicals to fentanyl are made, “an additional 10% tariff, above any additional Tariffs, on all of their many products coming into the United States of America.”
49: Uruguay’s left-wing opposition leader Yamandú Orsiwon the small South American country’s presidential election with 49% of the vote in a neck-and-neck runoff contest on Sunday. It was yet another rebuke of an incumbent party — the theme of many global elections this year — but not to worry: Uruguay is remarkably stable, and Orsi is a moderate with no radical plans.
1: One crew member died on Monday when a DHL cargo flight crashed during its attempted landing in Vilnius, Lithuania, with surveillance video showing a huge ball of flames as the plane went down. Lithuanian officials said they could not rule out whether Russia played a role in the crash, following months of suspicions over Moscow’s possible role in other cases of sabotage against the German shipping giant. Germany, meanwhile, is sending investigators to Vilnius to aid with the probe.
3: Human Rights Watch has determined that an Israeli drone strike that killed three journalists in Lebanon last month was most likely a deliberate attack on civilians, which is a war crime. More than 3,500 people in Lebanon have died amid Israel’s invasion, and more than 1 million have been displaced from their homes in the 5.3-million-strong country.
300: Asylum applications in Ireland have spiked 300% so far this year – with a fourfold increase from Nigeria – compared to last. The rise has been driven by tougher immigration stances in the UK, including a quixotic plan to house asylum-seekers in Rwanda. The uptick is becoming a political issue in Ireland, with voters increasingly concerned by the impact of increased migration on scarce housing.