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Story highlights
The move would deliver on President-elect Donald Trump's "America First" promise
The 10% proposal comes after GOP business interests expressed concern about a 5% tariff
(CNN) —
President-elect Donald Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources.
A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress.
Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings with key Washington players last week, according to two sources who represent business interests in Washington. But the senior transition official who spoke to CNN Thursday on the condition of anonymity said the higher figure is now in play.
Such a move would deliver on Trump’s “America First” campaign theme, but risks drawing the US into a trade war with other countries and driving up the cost of consumer goods in the US. And it’s causing alarm among business interests and the pro-trade Republican establishment.
The senior transition official said the transition team is beginning to find “common ground” with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular to the border adjustment tax measure included in House Republicans’ “Better Way” tax reform proposal, which would disincentivize imports through tax policy.
Aides to Ryan and Brady declined to say they had “common ground” with Trump, but acknowledged they are in deep discussions with transition staffers on the issue.
Curbing free trade was a central element of Trump’s campaign. He promised to rip up the North American Free Trade Agreement with Mexico and Canada. He also vowed to take a tougher line against other international trading partners, almost always speaking harshly of China but often including traditional US allies such as Japan in his complaint that American workers get the short end of the stick under current trade practices.
Photos: In transition: President-elect Trump
President-elect Donald Trump shakes hands with Martin Luther King III after they met at Trump Tower in New York on Monday, January 16. Afterward, King said the meeting was "constructive" and that the two discussed the importance of voting accessibility. Trump didn't speak to the media about the meeting.
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Photos: In transition: President-elect Trump
Trump speaks at Trump Tower in New York on Wednesday, January 11. In his first news conference since winning the election, a combative Trump made clear he will not mute his style when he is inaugurated on January 20. He lashed out at media and political foes alike.
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US Sen. Jeff Sessions, Trump's nominee for attorney general, is sworn in during his confirmation hearing in Washington on Tuesday, January 10. Trump and his transition team are in the process of filling high-level positions for the new administration.
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Jared Kushner, Trump's son-in-law, arrives on Capitol Hill for a meeting with House Speaker Paul Ryan on Monday, January 9. Kushner, a 35-year-old businessman-turned-political strategist, will be senior adviser to the president, a senior transition official told CNN.
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Trump gets on an elevator after speaking with reporters at New York's Trump Tower on January 9.
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Trump stands with Alibaba Executive Chairman Jack Ma, Asia's richest man, as they walk to speak with reporters at Trump Tower on January 9. Ma met with Trump to tease plans for creating "one million" jobs in the United States. Trump praised Ma after the meeting as a "great, great entrepreneur and one of the best in the world."
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Trump stands with legendary boxing promoter Don King after meeting at Trump's Mar-a-Lago resort in Palm Beach, Florida, on Wednesday, December 28. Trump and King met to discuss the relationship between Israel and the United States.
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Trump attends a meeting with Steve Bannon, chief White House strategist and senior counselor, at his Mar-a-Lago resort on Wednesday, December 21. Trump spent the holidays in Mar-a-Lago.
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Trump spokeswoman Kellyanne Conway talks to the press in the lobby of Trump Tower in New York on Thursday, December 15. Conway, who was Trump's campaign manager, will work in his administration as "counselor to the president," it was announced on Thursday, December 22.
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Trump meets with technology executives in New York on Wednesday, December 14. From left are Jeff Bezos, chief executive officer of Amazon; Larry Page, chief executive officer of Google's parent company Alphabet; Sheryl Sandberg, chief operating officer of Facebook; and Vice President-elect Mike Pence. The three main areas discussed were jobs, immigration and China, according to a source briefed on the meeting.
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Three of Trump's children -- from left, Donald Jr., Ivanka and Eric -- attend the meeting with tech leaders on December 14.
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Trump, Pence and House Speaker Paul Ryan wave during an event in West Allis, Wisconsin, on Tuesday, December 13. "He's like a fine wine," Trump said of Ryan at the rally, which was part of his "thank you" tour to states that helped him win the election. "Every day that goes by, I get to appreciate his genius more and more."
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Trump and rapper Kanye West speak to the press after meeting at Trump Tower in New York on December 13. Trump called West a "good man" and told journalists that they have been "friends for a long time." West later tweeted that he met with Trump to discuss "multicultural issues."
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Trump selected former Texas Gov. Rick Perry, right, to be his nominee for energy secretary, which would make Perry the head of an agency he once suggested he would eliminate.
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Trump has tapped ExxonMobil CEO Rex Tillerson to serve as secretary of state, the transition team announced December 13. Tillerson, seen here at a conference in 2015, has no formal foreign-policy experience, but he has built close relationships with many world leaders by closing massive deals across Eurasia and the Middle East on behalf of the world's largest energy company.
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Trump waves during the Army-Navy football game, which was played in Baltimore on Saturday, December 10.
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Betsy DeVos, Trump's pick for education secretary, speaks during an event in Grand Rapids, Michigan, on Friday, December 9.
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Trump shakes hands with Iowa Gov. Terry Branstad at an event in Des Moines, Iowa, on Thursday, December 8. Trump re-introduced Branstad as his pick for US ambassador to China.
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Trump greets retired Marine Gen. James Mattis at a rally in Fayetteville, North Carolina, on Tuesday, December 6. Trump said he would nominate Mattis as his defense secretary.
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Trump speaks to members of the media at Trump Tower in New York on December 6.
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Trump visits the Carrier air-conditioning company in Indianapolis on Thursday, December 1. Carrier announced that it had reached a deal with Trump and Vice President-elect Mike Pence, who is currently governor of Indiana, to keep about 1,000 of 1,400 jobs at its Indianapolis plant rather than move them to Mexico. The Carrier plant had been a theme of Trump's campaign promise to prevent more jobs from being outsourced to other countries.
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Trump and former Massachusetts Gov. Mitt Romney share a meal in New York on Tuesday, November 29. Romney was reportedly in the running for secretary of state.
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Trump waves to a crowd at The New York Times building after meeting with some of the newspaper's reporters, editors and columnists on Tuesday, November 22. Six takeaways from the meeting
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Trump is flanked by Pence and Romney after a meeting in Bedminster Township, New Jersey, on Saturday, November 19.
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"60 Minutes" correspondent Lesley Stahl interviews Trump and his family at his New York home on Friday, November 11. It was Trump's first television interview since the election.
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House Speaker Paul Ryan shows Trump and his wife, Melania, the Speaker's Balcony at the US Capitol on Thursday, November 10.
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Ryan listens as Trump speaks to the press at the US Capitol on November 10. Trump talked about his eagerness to join forces with Ryan to begin implementing new policies.
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Trump walks with his wife and Senate Majority Leader Mitch McConnell after a meeting at the US Capitol on November 10.
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Trump shakes hands with President Barack Obama following a meeting in the Oval Office on November 10. Obama told his successor that he wanted him to succeed and would do everything he could to ensure a smooth transition.
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Trump delivers his acceptance speech during his election night event at the New York Hilton Midtown hotel on Wednesday, November 9.
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It is an area where there is a huge gulf between Trump’s stated positions and traditional GOP orthodoxy. Business groups and GOP establishment figures – including Ryan and Senate Majority Leader Mitch McConnell – have been hoping the transition from the campaign to governing would bring a different approach.
Gulf with GOP establishment
Ryan did signal in a CNBC interview earlier this month that Trump’s goals of spurring US manufacturing could be accomplished through “comprehensive tax reform.”
“I’ll tell him what I’ve been saying all along, which is we can get at what he’s trying to get at better through comprehensive tax reform,” Ryan said.
The pro-business GOP establishment says the new Trump administration could make clear it would withdraw from NAFTA unless Canada and Mexico entered new talks to modernize the agreement to reflect today’s economy. That would allow Trump to say he kept a promise to make the agreement fairer to American workers without starting a trade war and exacerbating tensions with America’s neighbors and vital economic partners.
But there remain establishment jitters that Trump, who views his tough trade message as critical to his election victory, will look for ways to make an early statement that he is serious about reshaping the trade playing field.
And when Priebus told key Washington players that the transition is mulling a 5% tariff on imports, the reaction was one of fierce opposition, according to two sources who represent business interests in Washington and spoke on condition of anonymity because the conversations with the Trump team were confidential.
Priebus, the sources said, was warned such a move could start trade wars, anger allies, and also hurt the new administration’s effort to boost the rate of economic growth right out of the gate.
One of the sources said he viewed the idea as a trial balloon when first raised, and considered it dead on arrival given the strong reaction in the business community – and the known opposition to such protectionist ideas among the GOP congressional leadership.
But this source voiced new alarm Tuesday after being told by allies within the Trump transition that defending new tariffs was part of the confirmation “murder board” practice of Wilbur Ross, the President-elect’s choice for commerce secretary.
At least one business community organization is worried enough about the prospect of the tariff it already has prepared talking points, obtained by CNN Wednesday night.
“This $100 billion tax on American consumers and industry would impose heavy costs on the US economy, particularly for the manufacturing sector and American workers, with highly negative political repercussions,” according to the talking points. “Rather than using a trade policy sledgehammer that would inflict serious collateral damage, the Trump administration should use the scalpel of US trade remedy law to achieve its goals.”
The talking points also claim the tariffs would lead to American job loss and result in a tax to consumers, both of which would harm the US economy.
Trump aides have signaled that Ross is likely to be a more influential player in trade negotiations than recent Commerce secretaries. Given that, the aides know his confirmation hearings are likely to include tough questioning – from both Democrats and Republicans – about Trump’s trade-related campaign promises.
“The way it was cast to me was that (Trump) and Ross are all over it,” said one source. “It is serious.”
The second source was less certain about whether the tariff idea was serious or just part of a vigorous debate about policy options. But this source said the unpredictability of Trump and his team had the business interests nervous.
The business lobbying community is confident the GOP leadership would push back on any legislative effort to impose tariffs, which organizations like the Chamber of Commerce, the Business Roundtable, the National Association of Manufactures and others, including groups representing farmers, believe would lead to retaliation against US industries heavily dependent on exports.
But the sources aligned with those interests told CNN the conversation within the Trump transition includes using executive authority allowed under existing trade laws. Different trade laws enacted over the course of the past century allow the president to impose tariffs if he issues a determination the United States is being subjected to unfair trade practices or faces an economic or national security threat because of trade practices.
