Just days after winning a comeback election, President-elect Donald Trump is evaluating how his campaign promises might translate into policy. When it comes to rolling out the broad-based tariffs that he pledged on the campaign trail, the strategy is not yet formed, multiple sources familiar with the matter told CNN.
“The vision is there, but the game plan is not,” said one source close to the discussions, noting major decisions about how to pursue these strategies – and the personnel executing them – have yet to be made. Economic experts say the cost of the tariffs is expected to be passed along to consumers rather than being borne by companies who are producing goods broad.
As a candidate, Trump pledged to slap 60% tariffs on all goods coming in from China and 10% tariffs on goods imported from all other countries. While aides say those pledges weren’t campaign bluster, there are still questions about how to pursue them, through what legal authorities and when.
Among those advising Trump on economic issues before he makes critical appointments, a clear strategy has emerged: Link the increased China tariffs to tax reform negotiations expected to reach a head in 2025.
“The way that President Trump looks at tariffs are not in isolation. They are a fundamental and core part of his broader economic strategy, which also includes tax cuts, deregulation, energy diversity,” says Kelly Ann Shaw, a former Trump official who is now a partner at law firm Hogan Lovells.
Much of the landmark legislation from Trump’s first term – the 2017 Tax Cut and Jobs Act – is set to expire at the end of next year, with congressional Republicans already working on how to extend or make it permanent. Trump’s economic advisers – and the president himself – view the forthcoming tariff revenue as a way to offset that cost.
“Lower taxes and paying off debt,” Trump said, when asked by his former economic adviser Larry Kudlow about what he would do with the revenue from new tariffs.
Extending the provisions of the Tax Cut and Jobs Act that are set to expire – a doubling of the standard deduction, an increased Child Tax Credit, and an estate tax exemption, among others – would forgo $5.3 trillion in government revenue, according to the Center for a Responsible Budget. Ending taxes on tips, overtime pay, and Social Security benefits would cost trillions more.
Trump’s proposed tariffs would raise $2.7 trillion, the group estimates.
But the exact sequencing of which of Trump’s proposed tariffs are floated first – and under which laws, a detail that determines how long until the policy can take effect – are not yet known. Advisers have suggested the new administration could use authorities reserved for emergencies or national security, but those would be likely to meet legal challenges from corporate America.
And if they pursued tariffs as a direct offset for the longer tax cuts, such a move would need to be written out in the law, with congressional approval.
“Nothing can keep [Trump] from saying one thing is paying for the other,” said one senior adviser. “But it’s not a ‘pay-for’ unless it’s in the law.”
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver,” said Karoline Leavitt, a Trump-Vance transition spokeswoman.
More targeted tariffs
While the messaging may suggest the costs are offset, companies and consumers are still expected to feel the impact of any new levies.
“Companies are going to have to develop a tariff strategy, and they’re going to have to decide whether they’ll absorb the cost, pass it on to consumers, or remove the Chinese content in their goods,” said Jake Colvin, president of the National Foreign Trade Council, which represents importers from a variety of industries.
Trump has suggested that he would lower the corporate tax rate to 15% for companies that move their production back to the US, thus exempting them from his tariffs.
“The reality is you just can’t make everything here,” Colvin tells CNN.
The campaign has commissioned its own studies on the economic impact of these tariffs, with levies not far below the levels Trump has suggested, according to people familiar with the effort.
Some more targeted tariffs could be implemented sooner, these sources say. Trump has weighed a tariff on electric vehicles manufactured overseas, kvetching about how cheap Chinese electric vehicles are, compared to US EVs. And Trump’s advisers have expressed frustration with countries – like Canada and the European Union, for instance – that have slapped US tech companies with new taxes on their overseas profits, and retaliation could come soon.
“That’s directly in response to something the EU has already done,” one source said. “The EU is robbing US tax base. There’s a general view that the [broader] tariffs will come later.”
While the proximity of Robert Lighthizer, a longtime trade lawyer who deftly navigated Trump’s impulses during his first term, has signaled a more academic approach to these policies, the proximity of Elon Musk to Trump’s inner circle may be countering that.
Musk’s position as an operator of both a tech company in X and an EV company in Tesla, which manufactures cars both in the US and in China, is seen as a complicating factor in the new president’s ability to navigate the issues.
But one maxim is certain: Trump will threaten a consequence until it achieves his goal.
“He’s the ‘tariff man,’ but he’s also a dealmaker,” said a former Trump official. “If he can use the tariffs as a means to an end, he’ll do that.”
CNN’s Katie Lobosco contributed to this report.