President-elect Donald Trump offered some clues on his trade policy on Tuesday in nominating pro-tariff Wall Street veteran Howard Lutnick to lead the US Commerce Department.
In a statement posted on Truth Social, Mr Trump said the Cantor Fitzgerald executive would “lead our trade and tariff agenda”.
Mr Lutnick, who rebuilt Cantor Fitzgerald after hundreds of its employees were killed during the September 11 terrorist attacks, is a Wall Street veteran of more than 30 years. If confirmed, he would oversee a department responsible for imposing trade restrictions, funding chip projects and publishing economic data.
His nomination comes as the president-elect's trade agenda comes into greater focus, drawing much of the world's attention. In the months leading up to the 2024 election Mr Trump said he wants to impose across-the-board tariffs ranging between 10 and 20 per cent on all imports, as well as 60 per cent on all goods from China.
“Tariff, properly used, is a beautiful word. It's one of the most beautiful words I've ever heard. It's music to my ears,” Mr Trump said during an event in Georgia in September.
He imposed a series of tariffs during his first administration as part of his “America First” agenda. The first Trump White House increased tariffs on Chinese imports and imposed steel and aluminium tariffs on most countries. US trading partners including Canada, Mexico, the EU and India responded with their own tariffs.
Mr Lutnick praised tariffs as “an amazing tool” in an interview with CNBC in September.
“When was America great? At the turn of the century, our economy was rocking. We had no income tax, and all we had was tariffs,” he said during a rally at New York's Madison Square Garden a week before the election.
Mainstream economists generally agree the president-elect's tariffs agenda would hamper growth, increase the fiscal deficit and lead to a stronger dollar, and reignite inflation during a time when the Federal Reserve has nearly restored price stability.
“Walk back the across-the-board, double-digit tariffs. Walk it back, and walk it back immediately,” Wendy Edelberg, director of the Hamilton Project at the Brookings Institution, said during a panel on Tuesday.
One study from the Peterson Institute for International Economics projected a 20 per cent across-the-board tariff alongside a 60 per cent tariff on China would cost average US households more than $2,600 a year. Imposing tariffs on the lower 10 per cent rate would also raise about $225 billion in total revenue, compared to the $2 trillion raised through income tax.
“It is literally impossible for tariffs to fully replace income taxes,” PIIE scholars Kimberly Clausing and Maurice Obstfeld wrote in June.
A separate analysis from the Committee for a Responsible Budget estimates Mr Trump's fiscal plans – which includes imposing new tariffs on imports – would add $7.75 trillion to the US debt over the next decade.
The Commerce Department nomination is one of two major economic personnel decisions Mr Trump was expected to make during the transition period. He is reportedly still considering his options to run the Treasury Department.
