Trump’s Economic Advisers Consider Gradual Tariff Hikes Strategy

As the U.S. prepares for the economic strategies of the next administration, President-elect Donald Trump’s economic advisers are reportedly considering a new approach to tariffs. The proposal includes a gradual increase in tariffs over time to achieve multiple economic objectives. Below, we break down the key elements of this potential strategy and its implications.

What Are Gradual Tariff Hikes?

Gradual tariff hikes refer to a measured approach to increasing tariffs over a set timeline. Under this strategy, tariffs on imports would be raised monthly, increasing incrementally by 2% to 5% each month. This contrasts with implementing a large, immediate tariff increase, which could jolt markets and disrupt trade relationships.

The approach allows for a more dynamic method of managing trade while softening the potential impact on both domestic businesses and the global economy.

Purpose Behind the Strategy

The gradual tariff hike strategy has two stated goals:

This careful balancing act is central to the Trump’s administration’s broader economic stance of putting “America First” without creating significant economic shocks.

Legal Framework for Tariff Implementation

The ability to execute these tariff increases stems from the authority granted by the International Emergency Economic Powers Act (IEEPA). This statute provides the U.S. President considerable executive power to address any threats to the nation’s economy, national security, or foreign policy.

Under the IEEPA, the administration can bypass lengthy legislative processes and directly implement these strategies through executive orders. While such actions may be efficient, they have also sparked debate among lawmakers and economists about their potential long-term impact.

Market Reactions and Early Impacts

While details on broader market impacts remain unclear, the discussion surrounding these proposed tariffs has already influenced market sentiment. Investors and trade partners are closely monitoring developments, as this strategic move could have ripple effects across industries and supply chains.

Key questions likely to shape market responses include:

Markets are reactive to uncertainty, and this emerging tariff strategy may spur further fluctuations as details crystallize.