Key Takeaways:
– Jeb Hensarling warns President-elect Donald Trump and GOP Congress against tariffs.
– Hensarling advises sticking to reducing both taxes and spending, instead of imposing tariffs.
– Trump’s plan of universal tariffs might not balance the budget, as estimated.
– Tariff threats have triggered conflict in Canadian politics and caused worries about possible price hikes for retail goods and energy.
– This is not Hensarling’s first critique of Trump’s economic isolationism.
Jeb Hensarling’s Advice to GOP
Jeb Hensarling, former House Financial Services Chair, has proffered some advice to President-elect Donald Trump and the GOP-run Congress. His counsel revolves around steering clear of embracing tariffs as the route to balancing the budget.
Already famous for backing Trump’s tax cut package during Hensarling’s Congress tenure, he doesn’t back down from his stance. He reiterates his belief in reduction – both taxes and spending.
Trump’s Universal Tariff Plan Under the Microscope
Hensarling is wary of Trump’s proposition to impose a universal tariff plan. The Tax Foundation estimates that a 10% rate could rake in a handsome $2 trillion over a decade. But, Hensarling points out this estimate is overly optimistic and does not account for several potential speed-bumps.
Retaliatory tariffs, inflationary impacts, the potential harm to the gross domestic product, and possible legal complications are not factored in the estimate. And if these come to fruition, the dream $2 trillion may deflate significantly.
Projected Pitfalls of Tariffs
Despite Trump’s enthusiastic promotion, Hensarling sees more harm than good coming from tariffs. He expresses grave concerns about the spillover effects that Congress would have to confront if these tariffs come into play.
Trump’s pledge to impose hefty tariffs, especially on China, Canada, and Mexico, has already triggered waves in the political and economic spheres. These tariff threats have caused upheaval in Canadian politics and stirred anxieties over possible price hikes for essential items like retail goods and energy.
Hensarling’s Repeated Caution Against Economic Isolationism
This is not the first time Hensarling has voiced his concerns about Trump’s approach to the economy. His stance against Trump’s economic isolationist policy was evident early in the 2024 presidential primary. He even championed a super PAC for former Vice President Mike Pence instead of Trump.
Hensarling has raised the issue earlier too. In 2022, in another Wall Street Journal article, he expressed his worry about some Republicans forgetting their four-decade-long commitment to free trade and veering towards protectionism.
Final Word
Hensarling’s warning to Trump and the GOP Congress offers a sober take on a divisive issue. Embracing short-term ease, such as imposing universal tariffs, might seem like a beacon for balancing the budget. However, the long-term consequences can be too severe to ignore. As the world watches, the final move on tariffs, their impact and political fallout will continue to generate interest and debate.