Trump's 10% Tariff Plan Could 'Shake Up Every Asset Class,' Top Economist Warns: 'Structurally Breaking The Global System By Hook Or By Crook'

A prominent strategist warned that the proposed 10% tariff by former President Donald Trump could have a significant impact on the global economy.

What Happened: Michael Every, a global strategist at Rabobank, cautioned that Trump’s proposed 10% tariff on all imported goods could have a far-reaching impact on the global economy, reported CNBC. Every believes that the tariff could have a significant impact on various asset classes, including equities, FX, and bonds.

"First of all, they can't model that because they don't really understand what the second and third order effects are, and more importantly, they don't grasp that Trump isn't talking about a 10% tariff just because it's a 10% tariff," Every said.

"He's talking about structurally breaking the global system by hook or by crook to basically reindustrialize the U.S. in a neo-Hamiltonian manner which is how the U.S. originally industrialized, putting up a barrier between it and the rest of the world so it's cheap to produce in America and more expensive to produce everywhere else if you're importing into America."

Despite bipartisan criticism, Trump’s plan has gained traction. Treasury Secretary Janet Yellen acknowledged that while the tariffs would raise the cost of goods, they could be necessary in some cases.

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Every suggested that the tariff would not only increase the government’s revenue but also encourage domestic production. However, the policy has faced criticism from both sides of the aisle. The Tax Foundation think tank estimates that the tariff would effectively raise taxes on U.S. consumers by over $300 billion annually and could prompt retaliatory tax hikes by international trade partners on U.S. exports.

The American Action Forum (AAF) predicts that the policy could lead to a 0.31% ($62 billion) decrease in U.S. GDP, negatively impacting consumers and U.S. welfare by $123.3 billion.

Why It Matters: Trump’s proposed tariff has been met with criticism from both sides of the political spectrum. Earlier economist Paul Krugman weighed in on the development and said it was such a "bad idea." It was reported that the move could lead other major economies around the world to conclude that the U.S. cannot be trusted as a trading partner. This could have significant implications for the U.S. economy and its global trade relationships.

Trump’s proposed tariff is not the first time he has used tariffs as a tool in his trade policy. Last year in June, he vowed to impose a 100% tariff on Chinese goods if President Xi Jinping did not shut down China’s spy base in Cuba. His unpredictable approach to trade policy has been a source of concern for many analysts.

The former president is a leading Republican in most election polls for the 2024 presidential election despite facing multiple federal charges. The latest Morning Consult poll of GOP voters showed Trump with a comfortable 52-point lead over his Republican opponents, which dropped from a 55-point lead in the previous two polls.

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