Donald Trump has built his candidacy for president around his decades of experience in real estate and other business ventures. His son, Eric Trump — who serves as executive vice president of the Trump Organization — joined Yahoo Finance last week to talk about some of his father’s specific economic proposals.
One of Donald Trump’s most discussed proposals would involve instituting a 35% tariff against Mexico and a 45% tariff against Chinese goods. A model of Trump’s proposals, prepared by Moody’s Analytics, found the US would fall into recession if Trump managed to impose these tariffs and unravel the North American Free Trade Agreement.
In response to the potential detrimental economic consequences of these proposals, Eric Trump told Yahoo Finance the tariffs would be measures of last resort.
“I don’t think it’s something he necessarily wants to do,” he told Yahoo Finance. “I think it’s a tool that he wants to save, though, if he has to do it.”
The younger Trump cited examples of jobs and capital leaving the US.
“A couple of days ago I was in a plant and they made light bulbs,” he said. “The last employee of the plant was sent down by his company down to Mexico … to train the Mexican workforce to make the lightbulbs that he used to be making in New Hampshire. So he’s out of a job, and he just trained people from a different country to effectively take his job. You hear those stories and it’s so, so sad.”
When asked how Donald Trump would be able to incentivize companies to hire workers in the US, given the recession risk of steep tariffs, he said that US is already falling into a recession.
“Well, we’re falling into a recession anyway, because, what’s the point of cheap product if people can’t afford to buy it because you don’t have jobs, right?” he said. “I mean, at the end of the day, what’s the point of cheap product if you can’t buy it because people are unemployed and they’re living off of the government, and our national deficit is skyrocketing?”
The latest jobs report for June showed the unemployment rate at 4.9%, halved since hitting 10% in 2009 during the recession. Economists project GDP to grow around 2% in 2016.
Despite this projected economic growth, Eric Trump said he believes that both international currency manipulation and domestic regulation are hindering businesses.
“You see these countries that are manipulating their currencies every single day, making it impossible,” he said. “You also see our own regulation, and that’s probably the biggest worry. I mean, it takes the average business 16 months — small business, start-up business, 16 months to become formed and actually start. We’re losing more businesses than we’re creating in this country. I mean, we have an inverse slope.”
Trump also lamented America’s high corporate tax rate, which currently stands at 35%. President Barack Obama has made efforts to implement corporate tax reform, albeit unsuccessfully.
“We’re the most heavily taxed nation in the world,” Eric Trump said. “So not only do we have more red tape than anybody, not only do we make it harder, not only do we make it more expensive, but then we allow other countries to manipulate currencies which ultimately just — just leads to perpetuation of this process.”
Under Trump’s official tax plan, the highest tax bracket for individuals would be 20% instead of 39.6%, which would lower the tax rates for the nation’s highest earners. Trump’s tax plan would also increase the standard deduction for individuals, as well as significantly reduce America’s corporate tax rate — from 35% to 15%.
While Donald Trump has called the US “a poor country,” this tax plan would reduce federal revenues by about $10 trillion over its first decade, according to the Tax Policy Center, a nonpartisan research outfit. That would increase the national debt by nearly 80% of gross domestic product by 2036.
When asked if Donald Trump’s plan would increase the deficit, Eric Trump said, “Not if you’re increasing the economy … Not if you’re keeping jobs in the US that are otherwise leaving … The way we spend money is so reckless in this country. We need to become efficient with the way we spend money … We’re not putting America first. We’re putting other nations first.”