As Donald Trump prepares to take office, one of the most anticipated aspects of his economic policy revolves around tariffs.
The new administration’s stance on tariffs could significantly impact global trade, equities, and the broader economy. However, given the inconsistencies in Trump’s statements on the issue, investors and markets are left to speculate about how tariffs will be implemented. A deeper look at Trump’s key economic appointees provides valuable insight into the administration’s likely approach to trade policy.
Scott Bessent, Trump’s pick for Treasury Secretary, has been vocal about his belief that “free” trade has weakened US competitiveness, contributing to an imbalanced global economy. He views tariffs not as a permanent fixture, but as a strategic tool in negotiations. Bessent advocates for a gradual rollout of tariffs, aimed at specific countries based on their unfair trade practices. He has mentioned potential tariffs on both allies, such as Germany, and adversaries like China, underlining his flexible and tactical approach.
Lutnick, chosen for the role of Commerce Secretary, shares a similar viewpoint with Bessent regarding tariffs as a bargaining chip. He is not in favor of blanket tariffs across all goods but supports targeting specific products. Lutnick’s approach aligns with Trump’s broader agenda of negotiating more favorable trade deals. In particular, Lutnick has been keen on using tariffs as leverage against China, hoping to reshape the country’s trade behavior.
Stephen Miran, who will lead the Council of Economic Advisers, provides a more complex view of trade policy. He suggests that tariffs should be used as a way to raise revenue, essentially charging countries for using the US dollar as the global reserve currency. Miran believes that tariffs, while inflationary, will be largely offset by the appreciation of the dollar. Like Bessent, Miran advocates for a gradual and selective imposition of tariffs, rather than a one-size-fits-all approach.
As the US Trade Representative, Jamieson Greer takes a hardline position, particularly with regard to China. Having been part of the team that implemented tariffs in 2018, Greer is unlikely to negotiate with Beijing on trade issues. His stance reflects Trump’s broader view that China’s trade practices are a major threat to US manufacturing and economic interests.
Peter Navarro, who has been reappointed as senior counselor for trade and manufacturing, is another key figure in Trump’s trade strategy. Navarro supports using tariffs as a negotiation tool but also accepts the potential for high tariffs if other countries do not play by US rules. Navarro, like Greer, views China as the primary trade adversary, advocating for a decoupling from the Chinese economy rather than engaging in negotiations.
Kevin Hassett, nominated to head the National Economic Council, also supports the use of tariffs, though his stance has evolved. While initially advocating for high, universal tariffs on all countries, he has since suggested a cap on tariff rates. Despite his criticism of China, it is unclear whether Hassett favors engaging in negotiations with Beijing or prefers a more aggressive approach.
Across all these appointees, there is a consensus that tariffs should serve as a bargaining tool to achieve better trade agreements, particularly with China. While there is some variation in their approaches, most are opposed to blanket tariffs and favor targeted, gradual imposition. This strategic use of tariffs aligns with Trump’s broader vision of putting America’s economic interests first and renegotiating trade deals to benefit US workers and industries.
While some economists warn of the potential economic costs of Trump’s proposed tariffs, such as higher consumer prices and reduced global trade, the strategy reflects the president-elect’s commitment to addressing longstanding trade imbalances.
With input from the Financial Times and the Washington Post.
