Railing against inflation, Trump floats 20% tariff that could boost prices, experts say

Former President Donald Trump said he would expand his policy stance on tariffs, imposing up to 20% tariffs instead of the 10% he had previously proposed .

At a rally on North Carolina Wednesday , Trump focused on inflation and cost of living, a key issue for voters. As part of his economic talking points , Trump vowed to bring production back to places like North Carolina and tax more for imports.

"We are going to have 10% to 20% tariffs on foreign countries that have been ripping us off for years, we are gonna charge them 10% to 20% to come in and take advantage of our country because that is what they have been doing," he said in the rally.

Global trade experts have warned against widespread tariffs, a type of tax that a country charges on imported goods and services from another country, as they generally harm the economy.

RNC Spokesperson Anna Kelly said in a statement to USA TODAY, "President Trump put America First by instituting tariffs while simultaneously keeping inflation and consumer prices low...he will once again lower taxes, impose tariffs on foreign producers, bring jobs back to the US, and put America First on day one.”

More: Trump hits grocery costs, inflation at North Carolina campaign stop as Harris gains ground

What is a tariff?

A tariff is a form of tax imposed on imports from another country.

Economic theory generally shows higher trade barriers raise consumer prices and negatively impact economic output and income, according to the Tax Foundation, a nonpartisan tax policy nonprofit.

Tax Foundation senior policy analyst and modeling manager Garrett Watson told USA TODAY Thursday that some argue for tariffs to get more demand for domestic manufacturers, even though they are also part of the global supply chain that could be impacted by tariffs.

National security is also an argument in using tariffs to ensure domestic production.

Watson also said estimating the extent of economic harm is difficult because of the potential for foreign countries to retaliate with their own tariffs against the U.S.

"There's a lot of uncertainty right now about the extent and nature of the foreign retaliation," Watson said. "That's actually a big piece of the puzzle here because that would, of course, harm exporters and would have additional economic harm to the U.S."

10% import tariff a 'lose-lose': WTO chief

Before the North Carolina rally, Trump had touted a 10% trade tariff on all imported goods and 60% tariffs on imports from China.

According to an analysis by the Tax Foundation , these two tariffs together would lead to reduced imports and incomes. An estimate by Moody's shows the 10% tariff would lead to 2.1 million fewer U.S. jobs and a 1.7% smaller economy by 2028.

World Trade Organization chief Ngozi Okonjo-Iweala said in April the 10% tariff would prompt retaliation from partners, resulting in a lose-lose situation, according to Reuters.

"And then I think we will have a little bit of a free-for-all which would upend the stability and predictability of trade," she said speaking at an event.

The universal 10% proposal "was a pretty big escalation of the tariff threats coming from the former president compared to the tariffs enacted in his first term in size and in scale," Watson said "And of course, if he did 20% or something between 10 and 20, it would further magnify that."

Biden has kept many Trump tariffs in place

A Trump campaign spokesperson argued that the Biden administration was weak on foreign trade and crippled U.S. domestic manufacturing.

Trump waged a trade war in his first term, imposing a tariff on one-tenth of the U.S. imports that were limited to products like steel, washing machines and solar panels, and goods from China.

President Joe Biden has kept many of Trump's tariffs in place, and even increased on targeted items such as Chinese electric vehicles and solar panels.

The Tax Foundation analysis found the tariffs together add up to $79 billion, which theoretically leads to an additional $625 in taxes for the average U.S. household. The Tax Foundation also argues the tariffs have had an overall negative impact on the US economy, by raising prices, and reducing output and employment.

Watson also explained both Trump and recently Vice President Kamala Harris have put forward tax policy ideas without explaining how they fit into their bigger policy agenda.

"It's unclear what the guiding principle here is, like, where these numbers are coming from," Watson said. "Is it in an effort to try to offset other tax changes, or is this just what sounds good to folks who are supporting these tariffs? That would be the big question."

Contributing: Paul Davidson , Hannah Hudnall

This article originally appeared on USA TODAY: Railing against inflation, Trump floats 20% tariff that could boost prices, experts say