According to sources familiar with the discussion, members of President-elect Donald Trump’s economic team are discussing a monthly gradual increase of tariffs, aiming to boost negotiating leverage while avoiding an inflation spike.
The source said one of the ideas involves a gradual 2-5% increase a month, relying on executive authorities under the International Emergency Economic Powers Act.
Meanwhile, the proposal and the idea of monthly tariff gain are still in their infancy and have yet to be presented to Trump.
Trump’s advisers working on the plan include Treasury Secretary nominee Scott Bessent, upcoming director of the National Economic Council Kevin Hassett, and nominated leader of Council of Economic Advisers Stephen Miran, said the source.
Following the report, China’s yuan and currencies tied to its economy like Australian and New Zealand dollars trickled up. The offshore yuan gained 0.1% in Asia trading, while Australia saw a 0.3% boost.
China has been intensifying its backing for the yuan as it hovers near a historic low offshore. Nevertheless, investors anticipate that Beijing may ultimately permit depreciation if Trump imposes increased tariffs on Chinese exports.
During his 2024 presidential campaign, Trump proposed a minimum tariff of 10-20% on all imports, while China would be levied with at least a 60% tariff on all shipments.
As Inauguration Day approaches within a week, economists are left to speculate on the potential impact of Trump’s trade policies on the economy.
Trump’s tariff threats are considered a potential risk that could hinder economic growth. These measures could instigate inflationary pressures, particularly if other countries choose to retaliate with their own tariffs.
