Bloomberg News reported that two former economic advisers from President Donald Trump’s first administration have expressed critical views on Trump’s tariff policies.
At the Bloomberg Invest Forum in New York, Steven Mnuchin, who served as the first Treasury Secretary under Trump, stated that the main issue with tariffs today is uncertainty. He added that he supports imposing a more straightforward 10% tariff across the board that would serve as a consumption tax on foreign goods.
Mnuchin, now the founder of Liberty Strategic Capital, argued that a 10% universal tariff should be implemented through legislation and estimated that it could generate $2.5 trillion in revenue over ten years.
Instead of a universal tariff, Trump has imposed a 20% additional tariff on Chinese imports and a 25% tariff on goods from Mexico and Canada. He also announced plans to introduce reciprocal tariffs based on country-specific trade balances in April.
At the same forum the previous day, Gary Cohn, former director of the National Economic Council (NEC) under Trump and now IBM’s vice chairman, questioned the purpose of the tariffs. He acknowledged that there could be legitimate and strong reasons for imposing tariffs but said it was unclear what Trump was trying to achieve. Cohn pointed out that if tariffs were intended to encourage capital investment, they might not have a negative long-term effect on certain essential goods. However, he argued that tariffs on toys, games, and non-essential items were unnecessary.
He strongly criticized Trump’s broad tariff approach, describing it as a highly regressive revenue generation method.
Cohn also raised concerns about the tariffs’ impact on inflation and the likelihood of retaliatory measures from other countries, questioning the effectiveness of such a broad tariff strategy.
He further emphasized that if tariffs target goods purchased daily by ordinary consumers, they would function as a regressive tax, stating, “I don’t think we want a regressive tax.”
Howard Lutnick, Secretary of Commerce under Trump’s second administration, defended the tariffs, stating that they were designed to counter the fentanyl crisis by reducing the inflow of illegal fentanyl from Mexico, Canada, and China. Lutnick also emphasized that the reciprocal tariff policy aims to ensure fairness and reciprocal treatment for American products in foreign markets.