Golf, Sylvester Stallone, oil… Donald Trump has many passions, even obsessions. In economics too, the new American president has a big fad: customs duties, which he considers “the most beautiful word in the dictionary” (that makes three). From his first mandate, he had increased numerous entry taxes on imported products. And for this second term, he intends to do the same, even more brutally.
During his inauguration on Monday, the Republican said he was considering customs duties of around 25% for Mexico and Canada. And during his campaign, he mentioned taxes of up to 60% for Chinese products. But this customs passion could well turn against the American economy.
More taxes, more inflation
The equation is simple: “by taxing imported products more heavily, we increase their cost of sale on American soil, and therefore inflation,” explains Bernard Keppenne, economic head of CBC Banque. This is a paradoxical measure for a president who had made the purchasing power of Americans one of his campaign axes. »
Especially since the United States may be the leading world power, its trade balance is negative. Namely that they import many more products than they export. In 2023, the United States imported $773 billion more in products than it sold abroad, and is therefore “negative” with all other major trade centers. China, Europe, Japan… The United States imports so much “that according to several studies, if Donald Trump really increases customs duties, the bill could be more than 78 billion additional dollars per year for American consumers”.
A measure in favor of the “local” economy?
So of course, the idea didn't come from nowhere either. “Donald Trump hopes to reduce the trade balance by increasing taxes and establishing a balance of power, in order to force Europe, for example, to buy more American oil and gas in the hope of seeing customs duties lowered in exchange,” continues Bernard Keppene.
-Then, in wishful thinking, increasing the price of imported products should help promote the local economy by making it more competitive with products from abroad. Problem: the United States – as we have said – imports far too much, and products too cheap compared to “Made in USA” to hope that such a situation does not arise. What the expert illustrates with the case of the iPhone: “It is an American brand but it is mainly produced in India. And there is no scenario where its production returns to the United States, regardless of tariffs, it will always be cheaper to produce it elsewhere. »
The latest news on Donald Trump
Proof of this economic bet, the very serious American Central Bank has revised downwards its optimistic scenarios on the fall in rates in America, one of the criteria for disinflation in a country.
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