The unimaginable: Lutnick, Trump and the challenge of tariffs to rebuild America

by Melissa de Teffé in the United States
Master in Diplomacy from ISPI, expert on U.S. politics, accredited at the State Department for START InSight

THE BLITZKRIEG

A recent poll by NBC unveils President Trump’s approval and disapproval ratings, showing that support is currently at its highest -the best personal result over his two terms- with an average of 47% of Americans approving of his performance and 44% believing the country is moving in the right direction.

However, despite encouraging numbers, a majority of Americans still do not support him, resulting in an overall negative approval rating. Trump began his presidency with a positive balance, but in recent weeks his approval slowly declined again and, even at this current peak of popularity, he remains the least appreciated president in modern American history, compared to any other president at the same stage in office. While support for President Trump is dropping, the Democratic Party is facing an even deeper popularity crisis: only 27% of registered voters currently have a positive opinion of the Democrats, while 55% express negative views. This is the lowest level ever recorded for the party, with 38% of respondents even describing their view as “extremely” negative.

If we look at the numbers in Congress, Republicans currently hold a 53–47 majority in the Senate and a 218–213 majority in the House—margins so narrow that Trump was forced to withdraw and reconsider the nomination of Alice Stefanick, congresswoman from the State of New York, as ambassador to the United Nations. That’s why the first hundred days are crucial—not only to make use of the slim majority (since any presidential Executive Order must be approved by Congress), but also to prove that promises made in the campaign were true and consequently increase public acceptance.

THE NUMBERS

Leaving theatrics aside, let’s talk about the economy—as it underlies almost every political decision made in the country today. The United States is the richest country in the world, with an annual budget of $6.5 trillion and revenues of $4.5 trillion, resulting in an annual deficit of about $2 trillion. With a GDP of $29 trillion and a total debt of $36 trillion, the U.S. can nonetheless rely on an asset value estimated between $500 and $1,000 trillion—a level of wealth that makes the country extremely solid from an economic standpoint. “According to this vision, it would not be necessary to reduce even by a single cent the funds destined to citizens who truly have the right to social benefits, such as Social Security, Medicaid or Medicare. The real challenge would instead be to eliminate inefficiencies, stopping the sending of public money to those who exploit the welfare system, for example people who receive disability checks for decades while carrying out other work activities. In short, the United States should simply begin to monetize and effectively exploit their immense assets to re-establish fiscal responsibility,” says Lutnick, the newly appointed Secretary of Commerce.

WHO IS HOWARD LUTNICK?
Howard Lutnick is a businessman of Jewish descent, best known as the President and CEO of Cantor Fitzgerald, one of the world’s leading financial services firms, with over 12,500 employees spread across more than 60 offices in 20 countries. Recognized as one of the 24 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York, the company occupied the top five floors of one of the Twin Towers when, on September 11, 2001, it was tragically struck during the terrorist attacks. 658 employees were killed, including Lutnick’s brother Gary and his best friend Doug.

Cantor Fitzgerald was earning about 1 million dollars a day and had been built on a hiring philosophy that relied on employee word-of-mouth, which helped create a cohesive and motivated work environment. After the tragedy, Chairman Lutnick decided to support all the victims’ families financially, donating 25% of the company’s profits. Despite the devastating loss, Lutnick managed to rebuild the firm, thanks largely to its total absence of debt. This experience in crisis management and his pragmatic approach made him a well-known public figure, even beyond the financial world.

In 2023, Trump—whom Lutnick affectionately calls “DJT”—asked him to join efforts to reduce the national debt. Despite not having been involved in politics until then, Lutnick accepted, deciding to commit both personally and financially. He approached the task methodically: studying, reading, and informing himself on every detail concerning the functioning of the White House, the trade policies in place, and outlining the financial strategies necessary to balance the federal budget.

FIRST IDEA – DOGE

As a businessman, he decided to focus on how to fix the federal budget, particularly through a thorough review of public spending, which amounts to about 4 trillion dollars a year. Lutnick is convinced that, since there has never been a proper audit, at least 25% of that spending could be cut by simply eliminating errors or fraud—with estimated savings of 1 trillion dollars per year.

He also believes that it is possible to generate another trillion dollars through new revenue streams such as customs duties. It was Lutnick who decided to involve Elon Musk in the project, and also to coin the acronym DOGE (Department of Government Efficiency). Musk, who is known for swift decision-making and his drastic cost-cutting following the acquisition of Twitter, enthusiastically accepted, proposing a reduction of up to 80% of the federal workforce and drawing a direct comparison between the federal government and his own management experiences.

Lutnick introduced DOGE as a free provision of innovative tools and technologies to the government, eliminating the need to go through traditional bureaucratic procedures.

Historically, until 1913, the United States had no income tax, and this taxation was introduced to finance the war effort for the First World War.  Later, after the Great Depression and the Second World War, President Truman—through the Marshall Plan (1948)—deliberately chose to lower U.S. customs duties to support the economic recovery of countries devastated by the conflict, accepting in return that those countries would impose high tariffs on American goods. However, according to Lutnick, “we forgot that this was a temporary strategy, and we kept it even when it was no longer necessary.” An exemplary case is Kuwait (everyone here still remembers the story of American hero Red Adair, the oil wells firefighter), which, after being liberated thanks to military aid at a cost of 100 billion dollars, is the country that, since then, has imposed the highest tariffs of all.

Within this context, Donald Trump emerges as the only American politician who truly understood the need for changing the course and — again, thanks to Lutnick — he adds a human dimension to the issue, since the latter’s grandfather worked in the automotive industry, in factories located in the Midwest.“Thanks to those jobs, entire generations of workers like him were able to enjoy a stable and dignified life.”- “Many still remember the NAFTA agreements created under Clinton, which allowed major American companies to relocate their factories to Mexico, resulting in a devastating loss of jobs and dignity for entire generations of workers, especially in the automotive sector in the Midwest.” It is precisely to defend these people that Trump staunchly supports the policy of reintroducing appropriate tariffs—protecting American workers and encouraging the return of manufacturing to the United States. According to Lutnick, the idea of truly “free and fair” international trade does not exist, since every country protects its own market through customs duties. India, for example, imposes an average tariff of 50%, while the United States remains at only 4%. China is another significant case: despite being a major economy with a GDP of around 10 trillion dollars, it primarily consumes its own products and imposes high tariffs on imports, severely restricting access to its domestic market.

TARIFFS

In response to concerns that tariffs could lead to inflation, Lutnick explains that inflation is primarily driven by the increase in money supply—not by tariffs themselves. He argues that the common criticism from economists—that tariffs would cause both inflation and recession—is based on a theoretical framework of free and fair trade, which, in his view, does not exist in practice. While acknowledging that some imported goods may become more expensive due to tariffs, Lutnick considers this comparable to a consumption tax, one that does not result in generalized inflation. The main goal of Trump’s tariff policies is to bring production back to the United States—in other words, reshoring—while creating more skilled and better-paid jobs. Within the first weeks of the new Trump administration, companies such as TSMC had already invested around $2 trillion in new manufacturing facilities in the U.S. to avoid the new tariffs.

As of today, here is the list of the main companies that have announced major investments in new production plants in the United States, with related amounts:

Apple: Announced in February 2025 a total investment of over 500 billion dollars in the next four years, in sectors such as artificial intelligence and semiconductor engineering.

Hyundai Motor Group: In March 2025, announced investments totalling about 21 billion dollars, including the construction of a new steel plant worth 5.8 billion in Louisiana.

TSMC (Taiwan Semiconductor): Is investing about 100 billion dollars to expand production capacity in the United States, focusing on semiconductor manufacturing.

Eli Lilly and Company: Has decided to double investments in American plants, bringing them to 1.7 billion dollars, with new facilities in North Carolina and Indiana.

Meta Platforms: Announced an investment of 10 billion dollars to build its largest data center, located in Louisiana.

Samsung Electronics: Confirmed the construction of a semiconductor factory in Texas, with an investment of 17 billion dollars, expected to be operational from the second half of 2024.

Intel: Planned initial investments of about 20 billion dollars to build new semiconductor factories in Ohio, with potential expansion up to 100 billion.

Micron Technology: Announced the construction of a new semiconductor production plant in the state of New York with an initial investment of 20 billion dollars, potentially expandable to 100 billion over two decades.

Texas Instruments: Has launched investments that could reach 30 billion dollars for new semiconductor manufacturing plants in Texas.

Wolfspeed: In September 2022, announced an investment of about 1.3 billion dollars to build the world’s largest silicon carbide semiconductor factory, located in North Carolina.

Finally, Lutnick acknowledges that there is a limited range of high-tech and specialized products—such as certain semiconductor manufacturing equipment produced by ASML—that cannot be easily made in the United States for at least another five or six years. For these specific categories, he suggests adopting more targeted and flexible solutions, and recognizes the need for a more balanced tariff approach in these strategic sectors. The United States is the world’s largest consumer economy, with a GDP of $29 trillion—of which a remarkable $20 trillion comes from domestic consumer spending. This makes the U.S. the world’s primary customer—vital to the global economy. As a result, other countries that depend on the U.S. market should pay tariffs to access it. By imposing tariffs on foreign products, the U.S. could generate new revenue that would allow the federal government to reduce domestic taxes for American citizens. Lutnick ironically calls this new source of external revenue the “External Revenue Service” (the U.S. tax authority is named “Internal Revenue Service”)—an idea he personally presented to Trump, who welcomed it enthusiastically. Lutnick sees this mechanism as a return to the economic prosperity of pre-1913 America, when the country thrived on tariffs and had no income tax. By lowering domestic taxes, the effective cost of labor would also fall, as workers would be more motivated if their wages were tax-free. This strategy could greatly enhance U.S. economic competitiveness and improve workers’ quality of life. Another major initiative likely to be introduced is a new software system to manage customs tariffs. Lutnick aims to develop an advanced AI-powered system designed to radically automate and simplify the collection of customs duties in the United States. The system will work as follows:

Automatic product identification: Using advanced technologies such as image recognition and artificial intelligence, the software will be able to quickly identify each imported product simply by analyzing an image of the item.

Automatic tariff calculation: Once the product is identified, the system will automatically consult an up-to-date database to determine the appropriate customs tariff to apply, based on the product category and current trade regulations.

Precise weight measurement: The system will include highly accurate scales capable of measuring the product’s weight with great precision (up to 13 decimal places, as happens with gold). This method will ensure that there are no errors in weight calculation and, consequently, in the tariffs applied.

Elimination of manual inspections: Thanks to the accuracy of automated identification and the precision of the scales, it will no longer be necessary to physically open packages to verify their contents, significantly reducing processing times and increasing efficiency.

Collaboration with tech companies: Lutnick has already secured free participation from major American tech companies—including Google, Amazon, Microsoft, and Elon Musk’s firms—to help develop this software. These companies will contribute voluntarily, recognizing the strategic advantage of building technologies that, if adopted by the United States, could later be exported globally.

In summary, this system aims to revolutionize the management of customs tariffs—making the process faster, more accurate, and more secure, while simultaneously increasing U.S. revenues, eliminating inefficiencies, and drastically reducing the risk of fraud and administrative errors.

The announcement of 25% tariffs on imported cars has sparked negative reactions in global financial markets, with analysts forecasting price increases and the potential stagnation of production. Moreover, market volatility reflects the uncertainty caused by these protectionist measures, as investors question the long-term sustainability of such policies. According to a Wall Street Journal article, the imposition of new tariffs on steel and aluminum has significantly disrupted manufacturing supply chains, raising costs for both imported and domestically produced goods. Manufacturing industry executives have voiced concern, pointing out that the United States lacks sufficient production capacity for materials such as steel wire, screws, and other fasteners. (WSJ)

In conclusion, while the expansion of trade wars has led to a rise in protectionist measures worldwide, a slowdown in economic growth and weaker international cooperation—the latter is anything but cancelled.
Who’s to say whether this strategy will remain a solitary experiment, or it might be adopted by other countries as well, in their efforts to tackle public debt and revive their own economies?