Tariff Risks in US Election ‘No Joke’ – Wolfe Research

Investors should be cautious about the potential risks associated with increased US tariffs, especially following Republican presidential candidate Donald Trump’s recent emphasis on utilizing import taxes as a key component of his economic strategy, according to analysts at Wolfe Research.

During a campaign event on September 24, Trump threatened to implement a 100% tariff on all vehicles imported from Mexico and proposed research and development tax credits for US-based manufacturers. He also mentioned that John Deere, an agricultural equipment manufacturer, could face a 200% tariff if it proceeded with plans to move production to Mexico.

Trump has previously promised a blanket tariff ranging from 10% to 20% on nearly all US imports, including a significant 60% tariff on products coming from China. He maintains that these actions would stimulate US manufacturing activity. Recent polls indicate that a considerable number of likely voters support his proposals, believing he would manage the economy more effectively than his Democratic opponent, Kamala Harris.

However, economists caution that such tariffs could lead to renewed inflationary pressures. In a recent client note, Wolfe Research analysts highlighted that despite potential negative consequences, tariffs have increasingly become a central topic for Trump’s campaign. They noted that he has reinforced his main tariff proposals and positioned them as solutions for boosting domestic manufacturing, reducing the US deficit, subsidizing childcare, preventing de-dollarization, and deterring conflicts.

In response, Harris elaborated on her economic agenda this week in an 82-page booklet, labeling Trump’s tariff plans as a “sales tax” on American households. She proposed tax incentives for domestic businesses to encourage them to maintain operations in the US.

The Biden administration has also implemented its own tariffs and increased import duties on certain Chinese goods. While Harris has not explicitly stated her intentions regarding the continuation of these policies, her campaign promises indicate a commitment to resisting unfair trade practices that undermine American workers.

Wolfe Research analysts noted a significant disparity in the 2025 policy outlook, predicting that Republicans are likely to gain control of Congress, which would facilitate Trump’s ability to advance his proposals while complicating Harris’s efforts. They emphasized that Trump’s reliance on existing presidential authorities for implementing tariffs could have major implications for the markets, suggesting that investors may not need to pay close attention to the specifics of Harris’s tax plans.