Vice President of IBM Gary Cohnwho served as former President Trump’s chief economic adviser from 2017 to 2018 and as director of the National Economic Council, said Sunday that tariffs like the former president’s proposed plan can lead to inflation if the approach is not “methodical.”
The economy remains a major issue for voters ahead of the November 5 presidential election. The issue also featured prominently in the September 10 presidential debate, both Asset And Vice President Kamala Harris Both men laid out their plans for the economy. Harris said she would give bigger tax breaks to families but offset the costs by raising corporate taxes, while Trump said he would extend the tax cuts passed in 2017.
Trump’s proposed economic plan also includes tariffs on all imports into the United States, including a 60% tariff on imports from China and a 10% tariff on imports from other countries. The former president reiterated these proposals last week during the presidential debate.
“Other countries will finally, after 75 years, repay us for everything we have done for the world,” he said.
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Republican vice presidential candidate Senator J.D. Vance He also spoke about Trump’s tariff plan on Face the Nation Sunday.
“We want American workers to get tax cuts under President Trump’s policies, and we want to penalize companies that ship jobs overseas with tariffs,” Vance said. “We should not allow slave labor to benefit from American markets. If you want access to our market, you have to pay our workers fair wages.”
On paper, the proposed tariff hike could cover the cost of the tax cuts, which are a cornerstone of Trump’s campaign promise to end the “inflation nightmare.” Some experts have warned that Trump’s economic policies could slow or even reverse progress. note that tariffs actually act as a consumption tax, increasing the cost of goods imported into the United States, the brunt of which consumers typically feel on their receipts.
Cohn said Sunday that he found it “entirely reasonable” for the U.S. government to impose tariffs on Chinese imports of products also made in the United States, such as electric vehicles, which The Biden administration announced its plans in May. But he also noted that he doesn’t see the point of tariffs on imports of products that aren’t made in the United States.
“We import a lot of products that we don’t produce in this country. Those products are in high demand and we need them. A lot of that is pharmaceuticals and a lot of other products that we expect to find on our shelves when we go to the store,” Cohn said. “If we start taxing those products, we’re going to have inflation. To the extent that we want to produce those products in this country, we have to start taking a very methodical approach to doing that.”
The former Trump adviser then cited the CHIPS and Science Act as a competitive approach that was “carried out in a fairly reasonable manner.” The CHIPS Act funds domestic semiconductor production and was developed by the Trump administration before being signed into law by President Biden in 2023.
“So we can make chips here and become self-sufficient in chip manufacturing,” Cohn said. “We can then impose tariffs on foreign chips so they don’t flood our market at a discount, but until we have the capacity to make them ourselves, imposing tariffs on those chips would only weaken our economy.”
As both presidential candidates continue to campaign for their economic agendas, the U.S. Federal Reserve is this week should announce its first interest rate cut in more than four years since 2020.
Economists told CBS News that Trump’s tax cut plans would have an inflationary fiscal stimulus effect, and that his plans to deport immigrants could force employers to pay higher wages. In that case, the Fed could be forced to keep its benchmark interest rate elevated for longer.
If consumers “are upset now, they’ll be upset a year from now” about inflation if Trump wins and implements his policies, Mark Zandi, chief economist at Moody’s Analytics and co-author of a June report on the macroeconomic impacts of a Trump or Biden victory in November, told CBS News.
