Trashing Trump’s tariffs is now front and centre in Harris’s campaign

In an era of growing protectionism, when tariffs are increasingly viewed as good, and foreign imports as bad, an unusual development is unfolding: One U.S. presidential candidate is vigorously bashing new trade barriers proposed by the other.

Kamala Harris’s campaign speeches and written materials are laden with warnings about the damaging effects of Donald Trump’s anti-trade platform; specifically, his call for a 10 per cent levy on all global imports, which has foreign governments, including Canada’s, a little nervous. 

“He intends to enact what, in effect, is a national sales tax,” Harris said during her prime-time speech at the Democratic National Convention on Thursday. 

“Call it a Trump tax.”

She argues it would raise prices on middle-class families by almost $4,000 a year.

Though that’s likely an inflated estimate, it’s now a central Harris campaign message. And it’s a sign that there are still limits to the political punch of protectionism, even in this age, when American politicians from both parties profess to be obsessed with building more at home, and relying less on China.

“The pendulum has, I think, reached its maximum limit,” said Eric Miller, a Canadian-American trade consultant based in Washington.   

“It doesn’t mean we’re going back to the halcyon days of a U.S. focus on free trade and all of that. What it means, though, is that putting tariffs on everything, all the time, is not something that’s workable.” 

Certain types of tariffs remain popular and aren’t going anywhere, he said: notably, on Chinese imports and specific imports accused of unfair trade practices.

After all, the Biden administration hasn’t just kept Trump’s China tariffs in place, it’s expanded them in different ways, and it’s also increased duties in other disputes, including on Canadian softwood lumber. 

But that falls way short of Trump threatening tariffs on every product from every country that enters the U.S. The promise has unnerved Ottawa, and Canadian officials have already been in touch with Trump’s inner circle about how Canada can escape those tariffs. 

What Canada fears

Sources have told CBC News that Trump’s allies have offered no assurance of a reprieve, and are hinting that Canada would have to make some concessions to get one; in other words, negotiate to get an exemption. 

It’s one thing, Miller said, to slap tariffs on products that threaten U.S. security, or the U.S. economy, such as goods dumped onto the market at prices other countries can’t compete with, because they’re unfairly subsidized.

What Trump is threatening is something different.

“Sticking a random tariff on grape imports from Chile in the winter time? I mean, people say, ‘Well, what’s the point? I want grapes and you’re just making grapes more expensive,’ ” Miller said. 

Harris’s convention-speech reference to Trump’s tariff threats was far from a one-off. 

There are seven mentions of tariffs in the Democratic Party platform; five are critical references to Trump’s plans. The platform calls Trump’s tariffs “extreme,” and “reckless,” and says they’ll make life more expensive. 

Harris’s campaign emails and statements refer constantly to Trump’s tariff threats. It was even featured in a message on the overhead display screen during the party’s national convention in Chicago.

“A national sales tax. On everyday products and basic necessities that we import from other countries,” is how Harris described it in a recent speech in the battleground state of North Carolina. 

“[It] will devastate Americans. It will mean higher prices on just about every one of your daily needs. A Trump tax.”

Now, here’s what she’s not saying about these tariffs: That $4,000-per-household figure she cites is based on a rather strict estimate of the potential impact. 

The math on tariffs

Think-tanks, including the liberal Center for American Progress and the pro-trade Peterson Institute, put the potential effect at $1,500 to $1,700 per household. Goldman Sachs also said imposing the tariffs would raise inflation by 1.1 percentage points.

Harris has more than doubled such estimates, but Trump gave her the ability to do so because he’s started saying in speeches that he wants to toughen his plan, raising the tariffs to 10 to 20 per cent.

It’s crucial to note that Trump has been manifestly unclear on basic details — like what he intends to include and exclude; whether some countries will be exempt; and, crucially, whether some will be forced to negotiate if they want relief. 

Miller’s guess is that Canada would probably wind up negotiating its way to an exemption. But Trump wouldn’t mention this now. 

“You know the old saying, ‘You campaign in poetry and govern in prose’? Well, it sounds a lot better [for Trump] to say, ‘A 10 per cent tariff on everybody and everything,’ than it does to say, ‘A 10 per cent tariff on everybody except Canada and maybe Mexico and only on certain products,’ ” Miller said. 

Trump’s team insists the potential damage of tariffs is overblown and that even the above-cited estimates from think-tanks are off-base. 

His one-time trade czar Robert Lighthizer touts past tariffs as a success. He cites new investments in U.S. steel plants and worker raises. That said, new jobs in steel aren’t up — at least not yet.

Washing machines offer a good example of the pros and cons: Trump’s past tariffs created 1,800 jobs making those appliances, according to economists at the U.S. Federal Reserve and the University of Chicago. The price of washing machines increased by about $90. Each new job, the economists said, cost $817,000. 

The impact on international relations

Economist Paul Krugman, who is no Trump fan, downplays the effect of tarrifs and says this plan from Trump would have only a moderate economic impact; his main worry is the potential damage to U.S. alliances and instability in global affairs.

The bottom line is that tariffs have a moderate impact, according to one historian who studies them.

“In the political debate, both the benefits and the costs tend to get exaggerated,” said Douglas Irwin, an economist, economic historian and author on trade at Dartmouth College.

What’s less disputed is the potential for international tensions. Recall how tariffs blew up at a G7 conference a few years back, poisoning relations between Trump and Prime Minister Justin Trudeau. 

Canada has already warned of retaliatory action should Trump get elected and impose his tariffs. It’s a dynamic that could play out repeatedly around the world.

A top Democratic trade official talked about preserving international relations while attending the convention in Chicago.

The current U.S. trade representative, Katherine Tai, said she couldn’t speak specifically about trade during a partisan convention, for fear of violating the U.S. Hatch Act, which forbids mixing government work and party business.

WATCH | Katherine Tai discusses Canada-U.S. trade relations: 

How strong is the Canada-U.S. trade relationship?

Chief political correspondent Rosemary Barton speaks with U.S. Trade Representative Katherine Tai, on her first visit to Canada, about the state of the two nations’ trade relationship. Tai says dairy and supply management remain a point of contention between Canada-U.S. economies. 

But she spoke to CBC News in more general terms, about Trump’s threat to global alliances. 

“Donald Trump has an established record when it comes to international engagement,” Tai said last week. 

“When he was the president of the United States, our alliances, our partnerships, our relationships with the rest of the world were put under strain,” she said, noting that in this election, “the choice is pretty clear, in terms of positive engagement.”