Tesla and SpaceX CEO Elon Musk speaks at a rally for former US President and Republican presidential candidate Donald Trump at Madison Square Garden in New York, October 27, 2024.
Angela Weiss | Afp | Getty Images
Top allies and surrogates of former President Donald Trump, including Tesla CEO Elon Musk, are agreeing with economists who say Trump’s economic policy plans would raise prices for consumers, but Trump’s allies contend the effect would be short-term and would be worth it in the long run.
On Tuesday, Musk agreed with a social media post on X, whose author said that the Republican presidential nominee’s policy proposals could spark a “severe overreaction in the economy” that would mean “markets will tumble” before getting back to a “sounder footing.”
“Sounds about right,” responded Musk, one of Trump’s most high-profile billionaire backers.
Dozens of independent economists, Wall Street analysts and researchers have warned that Trump’s second-term proposals threaten to swell the federal deficit and reheat inflation.
Vice President Kamala Harris, the Democratic nominee, has capitalized on that criticism, branding Trump’s tariff proposal and the potential ensuing price hikes the “Trump sales tax.”
Musk is not the only Trump surrogate who has acknowledged that the former president’s economic platform — which includes universal tariffs on imports, with especially high rates on Chinese goods — if enacted, would have the immediate impact of raising consumer prices on imports.
Last week, Cantor Fitzgerald CEO Howard Lutnick, a co-chair of the Trump-Vance 2025 transition team, also acknowledged that imposing the kind of tariffs Trump pledges to put on foreign goods would raise prices.
“Correct: If I raise the tariff on just this particular idiosyncratic product, yes, right, it will be more expensive,” Lutnick said in a Thursday interview on CNBC’s “Squawk Box,” responding to a question about whether universal tariffs would effectively become a short-term sales tax.
Lutnick said higher prices on imports would steer consumers toward buying domestic alternatives, but he noted that strategy would fail for products that the U.S. does not produce.
“If we don’t make that particular product, that [price] will go up,” he said.
Trump’s running mate, Sen. JD Vance, of Ohio, has also nodded to the potential consumer pain of Trump’s vision for across-the-board tariffs, though he claimed that it would be worth the possible benefits.
“Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you’re ultimately much better off,” Vance said in an August interview on NBC’s “Meet the Press.”
Howard Lutnick, Chairman and CEO of Cantor Fitzgerald gestures as he speaks during a rally for Republican presidential nominee and former U.S. President Donald Trump at Madison Square Garden, in New York, U.S., October 27, 2024.
Andrew Kelly | Reuters
But the recent comments from people such as Musk and Lutnick also point to an emerging tactic Trump allies are using to deflect those attacks: Accept some immediate pain for eventual gains.
In response to CNBC’s request for comment on the Trump surrogates’ recent remarks, the Trump campaign rejected the notion that his policy proposals would bring short-term pain, and instead claimed his Democratic opponent would be responsible for any economic danger.
“The only pain facing Americans would be four more years of Kamala’s failed economic policies,” Trump campaign senior advisor Brian Hughes told CNBC in a statement.
Republican National Committee spokesperson Anna Kelly echoed Hughes in another statement: “Harris can’t keep her story straight, but the truth is the same: Harris has always opposed tariffs because she can’t be trusted to put workers first.”