‘Trillions of dollars’: Trump’s new threat
The US President has warned business and political leaders from every world nation that they will pay dearly for not playing by his rules.
US President Donald Trump has issued a new economic threat to world nations as he addressed business leaders at a major global get together.
“Shocked gasps” were reported at one of Mr Trump’s suggestions.
The new President said not doing things his way could lead to tariffs of “trillions of dollars” imposed on other countries and that would only benefit US coffers.
But there are questions as to whether tariffs could also harm US consumers by sending prices up.
Mr Trump gave a speech and took questions via video link from Washington at the World Economic Forum’s (WEF) annual conference in Davos, Switzerland.
The pow wow has attracted business and political leaders from across the globe and even a few celebrities with ex-England footballer David Beckham turning up.
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‘Trillions of dollars’
Mr Trump’s speech included familiar themes such as strengthening the US border with Mexico, ending the war in Ukraine and exploiting more of the US’ energy resources.
But he also warned that countries which didn’t invest in America would face taxes on their exports to the US.
“My message to every business in the world is very simple: come make your product in America, and we will give you among the lowest taxes of any nation on Earth,” Mr Trump said.
“But if you don’t make your product in America, which is your prerogative, then very simply, you will have to pay a tariff — differing amounts, but a tariff – which will direct hundreds of billions of dollars even trillions of dollars into our Treasury to strengthen our economy and pay down debt,” Mr Trump told the Davos meeting.
“Under the Trump administration, there will be no better place on earth to create jobs, build factories or grow a company than right here in the good old USA.”
The pitfalls of tariffs
Mr Trump has floated 10 per cent tariffs on China and 25 per cent on Canada and Mexico.
However, he has not signed any executive orders regarding tariffs despite the flurry of other pronouncements.
There is said to be mixed feelings in the Trump administration with some cautioning the President that high tariffs could lead to higher prices and further US inflation.
Mr Trump’s speech made it sound like foreign nations would be taxed in order to sell goods made overseas in the US.
But tariffs are not paid for by the nations that export goods. Rather, the tax is paid by importers in the country imposing the tariff. In this case, that would be American firms and likely – in the end – American consumers.
If a product costs more, that will hit US shoppers in the hip pocket. It might also dampen demand for the foreign sourced goods in favour of similar US made products, which could now be cheaper, boosting American companies.
But wide-ranging tariffs across nations could also spark tit-for-tat trade wars with countries putting tariffs on US imports in return. That would make it harder for US companies to export goods overseas and could see firms cut back production, investments and jobs in Amercia.
Australia’s economy would undoubtedly be harmed by tariffs. However, unlike many nations in Mr Trump’s sights, the US exports more to Australia than it imports.
‘Shocked gasps’
At the meeting, Mr Trump took aim at Canada once again claiming the US simply didn’t need many of the country’s exports.
He has repeatedly pointed out the US imports more from Canada than it exports to Canada.
“We have a tremendous deficit with Canada. We’re not going to have that anymore,” he said.
“Canada has been very tough to deal with.
“(But) we don’t need them to make cars, we don’t need their lumber because we have our own forests, we don’t need their oil and gas because we have more than anybody”.
But Mr Trump did have a solution that could see Canada maintain its current economic settings with the US.
“I said to them, you can always become a state, and if you’re a state we can have a deficit and we won’t have to tariff you”.
It was something of a throwaway quip but, nonetheless, the BBC reported there were “shocked gasps” in the hall when Mr Trump again mentioned Canada becoming a state. It’s a prospect that has been roundly rejected by the Canadian government and is deeply unpopular with Canadians.
China
Mr Trump said he hoped China and the US could have a “very good relationship”.
“All we want is fairness. We just want a level playing field. We don’t want to take advantage.
“The deficit (with China) is massive, as it is with other countries … and we can’t keep doing that, so we’re not going to keep doing that.
“But I like President Xi very much. I’ve always liked him. Covid – coming out of Wuhan – obviously strained it,” he said.
“I’m sure it strained it with a lot of people (but) always had a great relationship”.
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