President-elect Donald Trump's proposed tariffs on U.S. and other companies that move production out of the U.S. would undermine American competitiveness in the long term, a top U.S. trade official warned on Tuesday.
Trump has pressured Ford, General Motors, Toyota and other companies to bring factories back to the United States in recent weeks, threatening to impose a "big border tax" on them if they shift production to Mexico.
"When 95 percent of consumers, 80 percent of purchasing power and the fastest-growing markets for our products are outside the United States, there is a risk that if other countries followed suit we'd actually see an outflow of manufacturing from the U.S.", U.S. Trade Representative (USTR) Michael Froman said in an interview with Financial Times published on Tuesday, warning that the new barriers erected for U.S. exporters would hurt rather than help them in the long term.
The U.S. trade official said the proposed new tax on imports would be likely to face a challenge at the World Trade Organization and also take U.S. companies out of global supply chains that are now vital to competing internationally.
"If it discriminates against imports, it will raise international trade concerns and, of course, have a significant impact on any consumer or any business that relies on imports as inputs," Froman was quoted as saying.
In his final keynote address as the USTR on Tuesday to the Washington International Trade Association, Froman also emphasized that disrupting trade means working class Americans paying more for the basics of life.
"Tariffs are among the most regressive of all taxes. They disproportionately affect working class Americans, not the wealthy. Increasing tariffs on imports means increasing costs on those who can least afford it," he said.
Froman also warned that failure by the U.S. to move forward the Trans-Pacific Partnership (TPP) trade deal would be "a debilitating blow" to U.S. leadership and credibility in the Asian-Pacific region.
Trump had made trade as a centerpiece of his presidential campaign and called for dramatic changes in U.S. trade policy, trying to appeal to angry and frustrated blue-collar voters who have seen manufacturing job loss in an increasing global economy. He had vowed to pull the country out of the TPP and punish U.S. companies for off-shoring jobs.