In light of the escalation of commercial protectionism policies, customs tariffs are due to the façade strongly in the United States, this time through ambitious promises from US President Donald Trump, who, according to his commercial advisor Peter Navarro, intends to collect up to $ 700 billion annually from customs duties alone.
The American economist “Justin Fox” discussed this supposed scenario in an opinion article published by Bloomberg, providing an in -depth historical and economic analysis on whether this goal is realistic, and what it might mean to the American economy.
According to Navarro, the Trump plan is based on the imposition of $ 100 billion of fees on car imports, and another $ 600 billion on various imported goods, equivalent to about 2.4% of US GDP.
This percentage represents a huge increase compared to the current customs revenue, which is approximately 9 times the collection of customs, according to the data of the American Management and Budget Office.
A historical context .. from McKinley to Trump
Fox reviews the historical path of US customs revenues, noting that these revenues did not exceed 2% of the GDP since the early 1970s, and this number has been continuously achieved only in very short periods in the 1920s and 1930s.
Even during the presidency of William McKinley (1897-1901), which Trump often cits as a source of inspiration, customs revenues have not exceeded half of what is expected to be achieved by the current administration plans.
Fox adds that the US GDP data before 1929 depends on informal estimates, collected by “Measographworth.com”, while recent statistics depend on the US Economic Analysis Office. And he confirms that despite the potential disparities in accuracy, the numbers clearly indicate that Trump’s goal represents an unprecedented leap in the history of the American economy.
The structure of the American economy turns … wide dependence on imports
Since the 1960s, the United States has witnessed a significant increase in the percentage of imports to GDP. For example, imports from goods reached 11.2% of GDP in 2024, a much higher percentage of the proportions that were recorded before 1996, when imports were less than 10% of GDP.
This rise in relying on imports provides, theoretically, a broader base for the application of customs duties, and in this context, Fox notes that the value of 700 billion dollars of the total imports is approximately 21% of the value of imported goods, a percentage that does not differ much from customs revenue levels in the nineteenth century.
But the irony that highlights that one of the declared goals of the fees is to reduce the volume of imports, and therefore, any success of this policy in reducing imports will make it difficult to achieve the goal of revenue, and Fox adds that the return of the United States to the levels of customs tariffs in the nineteenth century may constitute an economic shock that is difficult to predict its consequences, especially in light of the structure of the modern economy.
Definitions, then prosperity, an illusion or a reality?
Fox warns of the prevailing belief that the high definitions are inevitably related to economic growth, although the United States has become a great economic power during the period of high definitions in the nineteenth century, there is no conclusive evidence linking the height of customs duties with sustainable economic prosperity.
In the article, Bloomberg is cited data from the World Bank for 2021, which shows that countries with the highest customs revenue are the percentage of gross domestic product, such as Senegal and Mongolia, not one of the most prosperous countries. Indeed, the implementation of Trump’s policy will put the United States in a level close to those countries, according to the comparison presented by Fox.
The writer explains that the Americans today are 17 times richer than the residents of Senegal, and 10 times than the Americans in 1900, which raises concern that the new customs policies may endanger this progress.
Between ambition and possible cost
The article concludes that achieving customs revenues of $ 700 billion annually is not theory, but it comes at a potential economic cost. The raising of the fees to this level, at a time when the American economy depends on imports significantly, may lead to:
- Increased consumer prices.
- Disable supply chains.
- Disbib an international trade relations.
The writer believes that moving forward with this plan may return the American economy to the nineteenth century model, not only in policies, but also in the results as well, and Fox concludes with an implicit warning that the way to achieve revenues from fees is not only full of challenges, but it may be fraught with long -term risks.
