In the Midwest countryside, amidst the cornfields, grain silos and agricultural equipment dealers – especially the shiny green machines from John Deere, a company that symbolizes the partnership between American agriculture and industry – dot the landscape. However, in July, the company announced that it would relocate part of its production from Dubuque, Iowa, to Ramos in northern Mexico by 2026.
Donald Trump’s response came swiftly. “I’m just notifying John Deere right now if you do that we’re putting a 200 percent tariff on everything you want to sell in the United States,” threatened the Republican candidate speaking on Tuesday, September 24. From a farm in Smithton, Pennsylvania – a key state in the upcoming presidential campaign – he stated in front of two of the company’s gigantic tractors, “Because it’s hurting our farmers. It’s hurting our manufacturing.”
A week earlier, he had issued the same threat in Detroit, in the equally decisive state of Michigan, against incumbent US automakers wanting to manufacture in Mexico. “I’m putting a 200% tariff on, which means they are unsellable in the United States” promised the Republican billionaire, repeating: “Tariffs are the greatest thing ever invented.”
He lowered this rate to 100% in an economic speech delivered on Tuesday in Savannah, Georgia, but the direction was clear. The candidate for a second term is intending to revive the trade war begun at the start of his presidency and put on hold by Joe Biden, although the latter retained the bulk of sanctions against China.
‘Trump’s latest musings’
Donald Trump dreams of returning to the 19th century, when tariffs accounted for over 90% of federal revenue until the Civil War (1861-1865) and about half until the introduction of the income tax in 1913. His ambition is to eliminate the income tax altogether, which is unrealistic, given that tariffs now make up just 2% of federal revenue, compared to 49% from income tax and 36% from Social Security contributions. Nevertheless, the magnate has promised to impose tariffs of 10% to 20% on all imports to the United States and 60% on those from China.
For Jason Furman, an economist at Harvard University in Massachusetts, this is “just a global trade war in the making.” “It’s something Donald Trump could do all on his own without Congress,” the former Obama adviser told CNBC.
Washington’s transatlantic think tank, the Peterson Institute, takes the subject very seriously. “Trump’s latest musings may be just that – musings. But his statements show he is serious about shifting the revenue base from income to imports,” said the pro-free trade think tank, highlighting the difference in order of magnitude. “His concrete tariff proposals enunciated so far would affect more than $3 trillion [€2.68 trillion] in trade, nearly 10 times the trade targeted by his China trade war.”
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