Commerce agent Lighthizer warns Wall Road to be ready

Former U.S. Trade Representative Robert Lighthizer speaks during an event with former U.S. President Donald Trump (not pictured) at Precision Components Group in York, Pennsylvania, U.S., on Monday, August 19, 2024.

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Donald Trump's longtime trade adviser is apparently telling Wall Street money managers that if re-elected, the Republican presidential nominee could begin implementing his sweeping tariff proposals quickly after taking office, according to political analysts at Piper Sandler.

“We have heard from a number of clients that Trump's former U.S. Trade Representative Robert Lighthizer met with investor groups and told them that Trump could announce 60% Chinese tariffs and 10% general tariffs shortly after taking office,” Das wrote Trio of research analysts at the investment bank said in a note on Friday.

Asked about the note, Trump campaign press secretary Karoline Leavitt did not deny that Lighthizer met with investors. But she warned: “No policy should be considered official unless it comes directly from President Trump.”

It was not immediately clear which groups spoke to Lighthizer, and analysts at Piper Sandler did not respond to a request from CNBC for further details. However, the company's clients are likely to include large asset management firms that pay for the company's stock and economic research.

According to Inside US Trade, Lighthizer advises Trump's presidential campaign on economic issues.

Lighthizer is a key player in crafting and implementing Trump's first trade policies and is also seen as a leading candidate for a number of high-level posts in a potential Trump Cabinet, including commerce secretary and treasury secretary.

He is currently chairman of the Center for American Trade at the Trump-aligned Washington think tank America First Policy Institute. An AFPI spokesman did not respond to a request for comment. Lighthizer is also a director of Trump Media, the publicly traded social media company majority owned by the former president.

Lighthizer's reported conversations and his apparent influence on Trump both underscore how central tariffs are to implementing Trump's macroeconomic vision.

Numerous economists and tax experts have warned that Trump's expansionary tariff plans will drive up prices, reduce U.S. gross domestic product and hurt employment in key industries.

Democratic presidential candidate Kamala Harris has repeatedly cited a progressive group's analysis that Trump's tariffs could amount to a nearly $4,000 tax increase on the average U.S. family.

The Trump campaign stressed to CNBC that Trump's tariff ideas should be seen in line with his broader plans, which include cutting regulations, expanding U.S. oil production and deporting millions of illegal immigrants.

Republican National Committee spokeswoman Anna Kelly also noted that Harris and President Joe Biden have retained, and in some cases even increased, many of the tariffs from Trump's first term.

“Harris has always opposed tariffs because she cannot be trusted to put workers first, but President Trump will restore American jobs, keep inflation low and raise real wages by cutting taxes, regulations lowers and unleashes American energy,” Kelly told CNBC in a statement.

“Flooding the Zone”

Republican presidential candidate former U.S. President Donald Trump speaks at the Detroit Economic Club in Detroit, Michigan on October 10, 2024.

Bill Pugliano | Getty Images

Analysts at Piper Sandler provided their briefing on Lighthizer in Friday's note, warning investors to take seriously Trump's promise to raise tariffs to historic levels.

“We expect tariffs to come more quickly in a second Trump term than in the first,” they wrote.

Trump “has the will and the way to follow through on his commitment to impose 60% tariffs on Chinese imports.”

The analysts wrote that it would not be surprising if Trump tried to use force to impose a sweeping 10% tariff, although such an attempt would likely be embroiled in legal battles over his authority to do so.

If that happens, they wrote, Trump could “flood” the zone with even more targeted tariffs.

These tougher tariffs could be focused on countries with which the U.S. has large trade deficits or on select industries such as the auto industry, where Trump has vowed to protect U.S. companies.

The analysts added: “There is little doubt that Trump would use the threat of higher tariffs as leverage to secure concessions on unrelated issues.”

Deterrent or cash cow?

Republican presidential candidate former U.S. President Donald Trump speaks during a campaign event at Riverfront Sports on October 9, 2024 in Scranton, Pennsylvania.

Michael M. Santiago | Getty Images

Trump's penchant for tariffs is well documented. During the campaign, he portrayed it as a panacea, both the key to prosperity and a master tool for the protectionist transformation of the US economy.

“Tariffs are the greatest thing ever invented,” the former president said during a September town hall meeting in Warren, Michigan.

He argues that his tariff plans will raise enough money to finance a series of massive tax cuts without requiring compromises or cuts to costly government programs like Social Security and Medicare.

At the same time, Trump has vowed to use tariffs as a tool to deter unwanted foreign competition and gain geopolitical influence over other nations.

Trump has repeatedly called for a universal base tariff of 10% on foreign imports and has floated the possibility of expanding that tariff to 20%.

He has also called for a 60% tariff on all Chinese imports and indicated that he would push for even higher tariffs in certain circumstances.

For example, in a speech Thursday at the Detroit Economic Club, Trump complained that China was building factories in Mexico to produce cars that would be sold in the United States

“I will impose whatever tariffs are necessary” to stop those efforts, Trump said.

“100%, 200%…1,000%,” he said. “With the factories they’re building, they’re not going to sell cars to the United States.”

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He has also suggested using tariffs as part of a carrot-and-stick approach to boost domestic production.

“If you don’t make your product here, you have to pay a tax or a tariff when you ship your product to the United States,” he said in a campaign speech in Michigan in late September. “And we will add hundreds of billions of dollars to our treasury and use that money to benefit the American people.”

At a meeting with Republican lawmakers on Capitol Hill in June, Trump even floated the idea of ​​eliminating the federal income tax entirely and replacing it with revenue from tariffs.

The Peterson Institute for International Economics rejected the idea, saying it was “literally impossible that tariffs could completely replace income taxes,” and warned that such a plan would wreak economic havoc.

At the same time, Trump insists that his tariffs will not further exacerbate the already high consumer prices that he blames Biden and Harris for causing.

“You’re not going to have higher prices,” Trump said during the Sept. 10 presidential debate. “Who will have higher prices is China and all the countries that have been ripping us off for years.”