Howard Lutnick, President Donald Trump’s nominee to head the Commerce Department, endorsed across-the-board tariffs to correct unfair global trade during his Jan. 29 confirmation hearing.
After returning to the White House more than a week ago, Trump has yet to outline his tariff plans.
Since his inauguration, Trump has threatened to impose levies on Canada, Mexico, and China as early as Feb. 1. He also announced levies on Colombia—they were later rescinded—and proposed tariffs on Taiwan.
The president laid out his trade blueprint at a gathering with House Republicans on Jan. 27, focusing on what he wants to tax first.
“We are going to look at pharmaceuticals, drugs, we are going to look at chips, semiconductors, and we are going to look at steel and some other industries, and you are going to see things happening,” Trump said.
“The only way to get out of this is to build your plant. If you want to stop paying taxes or tariffs, build here in America.”
It remains to be seen whether this is a shift from the initial pledge of a universal tariff to a more targeted approach.
For the U.S. Commerce nominee, an across-the-board strategy is superior to targeted levies.
“I think when you pick one product in Mexico, they’ll pick one product,” Lutnick said in front of the Senate Committee on Commerce, Science, and Transportation. “We pick avocados, they pick white corn, we pick tomatoes, they pick yellow corn.
“All you’re doing is picking on farmers, which is just not going to happen.”
Lutnick said the new administration will advocate for tariffs that can create fairness and reciprocity in worldwide trade because “they treat us poorly.”
“We are treated horribly by the global trading environment,” he said. “They all have higher tariffs, non-tariff trade barriers, and subsidies.”
Recent reports indicate that Treasury Secretary Scott Bessent supports starting tariffs at 2.5 percent and then gradually increasing them at the same pace each month. This would be comparable to what Bessent stated in media interviews during the presidential election, championing a layered-in approach to prevent an immediate spike in prices.
Speaking to reporters this week, Trump dismissed the idea, stating that he wants tariffs to be “much, much bigger.”
“No, that would not be acceptable to me,” Trump said.
Sen. Andy Kim (D-N.J.) expressed concern that the United States could harm allies.
While Lutnick stated that tariffs on China need to be the highest, he noted that the trade tactics of America’s allies need to be addressed.
“It needs to be fixed. So, while they’re our ally, they are taking advantage of us, and they are disrespecting us,” the Cantor Fitzgerald executive said.
Press secretary Karoline Leavitt confirmed to reporters at her first media briefing on Jan. 28 that Trump’s Feb. 1 deadline for tariffs is “still on the books.”Sen. Tammy Baldwin (D-Wis.) asked Lutnick if he could assure the American people that prices would not rise after introducing new or higher tariffs.
Echoing previous remarks on the campaign trail, Lutnick said the price of some products may increase, “but not all of them.”
“It’s not inflationary,” Lutnick said, pointing to India and China, two nations with the most tariffs and with little to no inflation.
“It is just nonsense that tariffs cause inflation. It is nonsense,” he told lawmakers.
Economists and public policymakers have debated whether tariffs, particularly the president’s plans, are inflationary.
Last year, former U.S. Trade Representative Katherine Tai defended then-President Joe Biden’s tariffs on China. She refuted concerns that they would boost consumer prices.
“First of all, I think that that link, in terms of tariffs to prices, has been largely debunked,” Tai told reporters at the time.
Despite levies instituted during Trump’s first term, the U.S. economy experienced relatively stable inflation. Between 2017 and 2021, the annual inflation rate ranged from 0.1 percent to 2.9 percent.
“Tariffs alone are not necessarily inflationary,” said Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, in a note emailed to The Epoch Times.
Appearing before the Senate Finance Committee on Jan. 16, Bessent disagreed with assumptions that tariffs are inflationary. He told lawmakers that tariffs can appreciate the U.S. dollar and force foreign manufacturers like China to export deflation.
Research published by LPL Financial determined that the more than 2,200 products excluded from tariffs helped control price pressures. Additionally, while importers endured the brunt of the tariffs, they did not pass the costs onto consumers.
“During Trump’s first administration, producer prices for the wholesale and retail industries were volatile as businesses managed supply chains amid a trade war, but consumers did not necessarily feel the full brunt,” wrote Jeffrey Roach, the chief economist at LPL Financial.
As part of Trump’s presidential trade memorandum, he directed federal departments and agencies to review the nation’s trade relationships and study other countries’ currency policies.
According to Lutnick, the Commerce Department has been thoroughly studying tariffs. One of the aims is to simplify the tariff exclusion process, which has been described as too complex.