Increased Tariffs: A Key Focus for Trump’s Campaign

Investors need to take the risks of increased US tariffs seriously, particularly after Republican presidential hopeful Donald Trump emphasized his plan to use import taxes as a key economic policy tool this week, according to analysts at Wolfe Research.

Trump’s Tariff Proposals

Speaking during a campaign event on Sept. 24, Trump threatened to slap 100% tariffs on every car coming into the US from Mexico. He also mentioned rewarding US-based manufacturers with research and development tax credits. Earlier in the week, the former president indicated he would impose a 200% levy on agricultural equipment maker John Deere (NYSE:DE) imports into the US should the firm follow through with plans to shift production to Mexico.

Trump has previously vowed to implement a blanket tariff of 10% to 20% on nearly all US imports, including a substantial 60% import tax on products from China. He argues these moves would boost US manufacturing activity. Recent polling suggests that a majority of likely voters support this proposal and view Trump as a better steward for the economy compared to his Democratic rival Kamala Harris.

Economic Concerns

However, economists have cautioned that such tariffs could reignite inflationary pressures. In a note to clients on Thursday, Wolfe Research analysts pointed out that, despite potential downsides, tariffs have increasingly become the Trump campaign’s go-to solution for various economic issues, including enhancing domestic manufacturing, reducing the US deficit, subsidizing childcare, halting de-dollarization, and preventing wars.

Harris’s Economic Agenda

In contrast, Harris has detailed her economic agenda in an 82-page booklet. The vice president, who branded Trump’s tariff plans as a “sales tax” on American households, proposed tax incentives for domestic businesses to maintain operations within the US. Additionally, the Biden administration has instituted its own tariffs and increased import duties on select Chinese goods. Although Harris has not explicitly stated her position on extending these policies, her campaign site emphasizes her commitment to not tolerate unfair trade practices harming American workers.

Policy Outlook

Wolfe Research analysts noted the “fundamental asymmetry of the 2025 policy outlook,” indicating that Republicans are poised to gain control of Congress, making it easier for Trump to implement his proposals and more challenging for Harris to carry out hers. They remarked, “This is clearest on tariffs, where Trump plans to rely on existing presidential authorities.”

Incremental signals regarding Trump’s seriousness about tariffs are significant for markets, while details of Harris’s tax plans may not evoke the same investor concern.

(Reuters contributed reporting.)