Trump to Move Fast on Tariffs, Says Wall Street Firm, Citing Clients Who Met with Ex-Trade Chief
President Donald Trump is poised to move quickly on tariffs, a Wall Street firm said, citing conversations with clients who met with Robert Lighthizer, the administration’s former chief trade negotiator.
The firm, Evercore ISI, noted in a client note that Mr. Lighthizer was one of the administration’s key architects of the “America First” trade agenda, which aimed to bolster U.S. manufacturing and reduce trade deficits. The administration’s trade strategy has drawn criticism from business groups and some economists who warn it will lead to higher prices for consumers and businesses.
“In our conversations, our clients described Lighthizer as being committed to aggressive trade action and very hard-line in negotiations,” Evercore analysts wrote in their note. The firm said it sees a “higher probability” of new tariffs and a potential increase in tensions with China.
Mr. Lighthizer, who served as the U.S. Trade Representative from 2017 to 2021, left the administration at the end of January. He was replaced by Katherine Tai, a career trade official who previously served as a lead negotiator for China. Ms. Tai has said she wants to take a more collaborative approach to trade.
However, Evercore analysts cautioned that “the administration’s rhetoric continues to suggest that aggressive actions will likely be taken in the trade space.”
The analysts cited a recent speech by Commerce Secretary Gina Raimondo, who said the U.S. is considering “every single lever” to protect its national security interests. Ms. Raimondo’s comments were interpreted by some as a sign that the administration is prepared to use tariffs on goods from China and other countries.
Evercore’s note reflects a growing sense of uncertainty in the business community about the future of U.S. trade policy. Businesses are bracing for the possibility of more tariffs, which could disrupt supply chains and lead to higher prices.
Some analysts say that the administration’s “America First” agenda is proving unsustainable in the long run. They point to the fact that tariffs have led to higher prices for consumers and have damaged relationships with trading partners.
“The administration’s focus on protectionism has made it harder for businesses to compete and has slowed the pace of economic growth,” said Greg Valliere, chief U.S. policy strategist at AGF Investments. “The current economic climate makes it all the more important to focus on policies that promote growth and innovation, rather than those that harm our economy in the short term.”
Others argue that the administration’s tough stance on trade has been successful in pressuring China to make concessions on intellectual property rights and forced technology transfers.
“The administration has made it clear that it is serious about enforcing trade laws and that it will not back down from a fight,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics. “The U.S. is in a stronger position now to negotiate from a position of strength with China and other countries.”
The Trump administration imposed tariffs on billions of dollars worth of Chinese goods in 2018 and 2019, leading to a trade war between the two countries. The two sides signed a phase one trade agreement in January 2020, but they have been unable to agree on a phase two agreement.
China has said that it is willing to resolve trade differences through negotiation, but it has also warned that it will not compromise on its core interests. The two sides are expected to continue their trade negotiations in the coming months.
Meanwhile, the Biden administration has said that it will review U.S. trade policies and work with allies to promote fair trade practices.
“We are not going to let China continue to ignore the rules,” Biden said during his campaign. “We are going to make sure that they play by the rules and that they’re held accountable for their actions.”
However, some analysts believe that the Biden administration is likely to continue to use tariffs as a bargaining chip in its negotiations with China.
“The Biden administration is inheriting a trade relationship with China that is very complex and fraught with tension,” said Mark Zandi, chief economist at Moody’s Analytics. “Tariffs are likely to remain a tool in the administration’s toolkit for dealing with China.”
The trade relationship between the U.S. and China is likely to be a defining issue for the Biden administration. The two countries are the world’s two largest economies and their trade relationship has a significant impact on the global economy.
“The Biden administration faces a real challenge in finding a way to navigate the complex and ever-evolving relationship between the U.S. and China,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “The administration needs to develop a clear and coherent strategy for dealing with China on trade and other issues.”
The stakes are high for both the U.S. and China. The two countries are engaged in a strategic competition for economic and military dominance in the Asia-Pacific region.
“The future of the global order is being shaped by the rivalry between the U.S. and China,” said Michael O’Hanlon, a senior fellow at the Brookings Institution. “The trade relationship is one important battleground in this larger strategic competition.”
The Biden administration is likely to face pressure from both business groups and labor unions as it crafts its trade policy. Business groups are calling for a return to a more collaborative approach to trade, while labor unions are calling for stronger enforcement of labor and environmental standards.
“The Biden administration needs to find a way to balance the competing demands of business and labor,” said Kimberly Ann Elliott, a senior fellow at the Center for Global Development. “It needs to develop a trade policy that promotes growth and innovation, but also protects American workers and the environment.”
The Biden administration is also likely to face pressure from allies who are concerned about the use of tariffs as a weapon in trade disputes.
“The Biden administration needs to build strong alliances to promote a rules-based international trade order,” said Charles Freeman, a senior fellow at the Center for Strategic and International Studies. “The use of tariffs as a weapon in trade disputes is damaging to the global economy and undermines the rules-based system that has served the world so well for so long.”
The future of U.S. trade policy remains uncertain. However, the Biden administration will need to strike a balance between the competing demands of business, labor, and allies in order to navigate the complex trade landscape.
