Donald Trump is doubling down on his use of economic protectionism as an electoral argument. The former president and Republican candidate for the presidency of the United States threatened on Tuesday to impose 100% tariffs on cars imported from Mexico. “We will put a 100% tariff on every car that crosses the Mexican border,” he said during an event on the economy in Savannah (Georgia). Major American manufacturers produce cars in Mexico. Even his ally, Elon Musk, has plans to build a large factory in the United States’ southern neighbor, although for now they are on hold.
“The only way you can get rid of that tariff is if you want to build a plant right here in the United States with you operating that plant,” Trump added. “I want German car companies to become American car companies. I want them to build their plants here,” he said during the same speech. In fact, there are already many German car manufacturers (including Volkswagen, Mercedes and BMW) and Asian ones (such as Toyota or Hyundai) with large production plants in the United States.
Trump did not go into details of his proposal. A few months ago he said he would impose tariffs on cars manufactured in Mexico by Chinese companies, but now he does not seem to exclude any imported vehicles from the tariffs.
The former president said that if he wins the November 5 election, he would add tariffs of up to 20% to every foreign import entering the United States, as well as another tariff of up to 60% on all Chinese imports. He also said he would impose a “100% tariff” on countries that move away from using the US dollar.
In his protectionist rhetoric, Trump also threatened this week that tractor and agricultural machinery manufacturer John Deere would be subject to 200% tariffs if it moves production to Mexico. The US firm plans to manufacture some of its models in the neighbouring country due to lower labour costs. “They announced a few days ago that they are going to move a large part of their manufacturing activity to Mexico,” Trump said on Monday in Smithton, Pennsylvania. “I am notifying John Deere right now: if you do that, we will put a 200% tariff on everything you want to sell to the United States,” the former president added.
The company says on its website that in order for American factories to carry out high-value-added activities, “it is sometimes necessary to relocate less complex operations, such as cab assembly.” “The company deeply values the highly skilled American workforce in our home communities, which enables John Deere to manufacture the best equipment in the world. In response to difficult market conditions, we have recently taken steps to reduce costs, including workforce reductions. These decisions were difficult, but vital to our continued success and competitiveness,” it says, before concluding: “John Deere is a great American company that employs great American workers and manufactures the best equipment in the world.”
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Within this protectionist policy, which is the focus of his economic discourse, Trump proposed a few weeks ago in a speech at the Economic Club of New York to lower the US corporate tax rate from 21% to 15% for companies that produce in the United States. “We want to manufacture our products in the United States and in most cases we can. If you subcontract, relocate or replace American workers, you will not be eligible for any of these benefits,” he said then.
On Tuesday, he reiterated these messages, as well as tax cuts for high-income earners and corporations. “We are putting America first. This new American industrialism will create millions and millions of jobs,” Trump said.
For tax reforms, it would not be enough for him to return to the White House; he would also need a Republican majority in both chambers of Congress.
Despite the tariffs he imposed during his term as president, the United States lost industrial jobs in his four years in the White House. Now he promises an “industrial renaissance,” something that has largely occurred during the term of his successor, Democrat Joe Biden, who has also pursued a protectionist policy and granted multi-billion-dollar aid and tax breaks for investments in strategic sectors.
“With the vision I’m outlining today, we’re not only going to stop our companies from leaving for foreign lands, but under my leadership, we’re going to take jobs from other countries,” he said. “Have you ever heard that expression? Have you ever heard that we’re going to take jobs from other countries? It’s never been said before. We’re going to take their factories, and four years ago we were very clear, we’re going to bring thousands and thousands of companies and trillions of dollars in wealth back to the good old United States.”
With his extreme protectionism, Trump has broken with the Republican tradition of free trade. Tariffs on imports imply higher costs for American companies (if the goods are intermediate) or higher prices for consumers (if the goods are final consumer goods).