US Economy

Trump's tariff threats: There is precedent, expert says

Some precedent for tariff threats: Pro

President-elect Donald Trump's tariff threats may be a useful tool to keep jobs from moving out of the country, and he wouldn't be the first leader to employ such tactics, manufacturing expert Scott Paul told CNBC on Monday.

In fact, President George W. Bush used his authority to smack tariffs on some foreign steel and President Ronald Reagan imposed tariffs on motorcycles to help Harley-Davidson, the president of the Alliance for American Manufacturing told CNBC's "Closing Bell."

"There is some precedent, but economy-wide that is a different story," Paul said.

Trump has repeatedly said he would impose tariffs or other taxes on imports into the United States. On Sunday, he tweeted about the issue again, threatening to hit companies with a 35 percent tariff if they leave the country.

"Employing the threat of things like tariffs is actually a pretty useful counterbalance to try to keep some jobs here when so much of the focus has been on shareholder value," said Paul.

Terry Haines, senior political strategist at Evercore ISI, believes Trump is serious about making a new regime for American businesses, but said about his recent rhetoric, "You shouldn't take a lot of those details seriously."

Instead, he believes the administration will move in the direction of tax reform to keep U.S. companies in the country.

"You are going to have CEOs say, 'Look, I understand from Congress as well as from the president, his senior advisors, that what's coming is a serious tax reform effort and that will benefit American business … and benefit American jobs, and perhaps I ought to take a look at that before I make any precipitous action," he said. "I think that, much more than the threat of tariffing, does the job."

— CNBC's Fred Imbert contributed to this report.