Trump team studying gradual tariff hikes of 2% to 5% per month: Sources

WASHINGTON - Members of US President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation, according to people familiar with the matter.

One idea involves a schedule of graduated tariffs increasing by about 2 per cent to 5 per cent a month and would rely on executive authorities under the International Emergency Economic Powers Act, the people said.

The proposal is in its early stages and has not yet been presented to Trump, the people said – a sign that a monthly stepped approach is early in the deliberation process.

Advisers working on the plan include Mr Scott Bessent, the nominee for Treasury secretary, Mr Kevin Hassett, set to be director of the National Economic Council, and Mr Stephen Miran, nominated to lead the Council of Economic Advisers, said the people, who requested anonymity to discuss internal deliberations.

A spokesman for Trump’s transition team referred to the President-elect’s previous public comments and social media posts about tariffs.

During the 2024 presidential campaign, Trump floated minimum tariffs of 10 per cent to 20 per cent on all imported goods and 60 per cent or higher on shipments from China.

Since he won the election in November, multiple reports have emerged on how aggressively he will implement tariffs – with Trump himself calling one report of a measured roll-out false.

The uncertainty is leaving investors and companies guessing. The S&P 500 index earlier on Jan 13 dropped below where it ended on Nov 5, just before Trump was elected, before rebounding later in the day.

Investors recently have been dumping Treasuries as fears grow that inflation will remain stubborn, partly because of new tariffs, creating a headwind for stocks and the broader economy.

With just a week until Inauguration Day, economists can only guess as to how Trump’s trade wars will influence the economy.

That has left a complicated picture for the Federal Reserve because Trump’s tariff threats are seen as a risk to the growth outlook while potentially stoking inflation if nations retaliate.

International Monetary Fund managing director Kristalina Georgieva said tariff threats are already driving up longer-term borrowing costs around the world.

Uncertainty about the incoming administration’s trade policies is adding to worldwide economic headwinds and “is actually expressed globally through higher long-term interest rates”, she told reporters in Washington on Jan 10.

That is happening even as short-term rates have gone down, a “very unusual” combination, she said. BLOOMBERG