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Donald Trump threatened to ramp up his economic assault on some of America’s biggest trading partners on Thursday, vowing to impose new tariffs on countries that target products made in the US within weeks.
The US will impose “reciprocal” duties, the president announced. “We want a level playing field,” he declared in the Oval Office, pledging to roll out a “beautiful, simple system” of new US import duties that match those imposed by other countries.
No new specific tariffs were announced, however, triggering a relief rally on Wall Street. Instead, Trump signed a presidential memorandum ordering the development of a comprehensive plan to address what the White House described as “longstanding imbalances” in the global economy.
Americans could face “some short-term disturbance” if the US imposes higher tariffs on foreign goods, Trump acknowledged. “Prices could go up somewhat short-term,” he said. “But prices will also go down.”
“What will go up is jobs,” claimed Trump. “The jobs will go up tremendously.”
It is the latest bid by Trump to strain Washington’s trade ties with countries across the world – allies and rivals alike – to obtain political and economic concessions.
A press notice circulated by the Trump administration promised it would take action to “put the American worker first, improve our competitiveness in every area of industry, reduce our trade deficit, and bolster our economic and national security”.
US officials pointed to a series of examples of tariffs and other trade barriers that they said demonstrated how other countries were not treating the US fairly. They pointed to the European Union’s 10% tariff on cars, alongside the 2.5% US tariff on cars, and claimed that shellfish from 48 states cannot be exported to the EU, while the bloc “can export all the shellfish it wants to America”.
They also cited a 100% tariff imposed by India on US motorcycles, while the US only charges 2.4%, and an 18% duty in Brazil on US ethanol, while the US charges 2.5%.
Trump also called for Russia’s return to the G7 group of industrialised nations, saying it had been a mistake for Moscow to be expelled. Russia was suspended from the group – then known as the G8 – in 2014, following the annexation of Crimea, and announced its permanent withdrawal in 2017.
The administration has so far threatened more tariffs than it has introduced. Duties on Colombia were shelved when it agreed to accept military aircraft carrying deported immigrants; duties on Canada and Mexico have been repeatedly delayed; and modified duties on steel and aluminum, announced earlier this week, will not be enforced until next month.
An additional 10% tariff on goods from China is, for now, the only threatened trade attack actually enforced since Trump returned to the White House. On Friday, it emerged that a key component of this – removing the longstanding duty-free status of low-cost packages – had been delayed.
Inflation is already proving stubborn. In January, as Trump returned to office, it ticked up to an annualized rate of 3%. Egg prices have been soaring in recent months, as many US consumers continue to grapple with the elevated cost of living.
Trump said he would not commission any studies into how his mooted tariffs could affect prices for Americans. “There’s nothing to study,” he said. “It’s going to go well.”
Asked whether the Trump administration’s plan to align US tariffs with those imposed by other countries risked raising prices for US consumers, Lutnick – standing alongside the president – sought to shift responsibility onto other countries. “If they drop their tariffs, prices for Americans are going down,” he said.
Trump has frequently highlighted the US’s trade deficit with the world – the fact that the value of its imports greatly exceeds that of its exports – as evidence of unfairness.
“Closed markets” overseas reduce US exports, while “open markets at home result in significant imports”, the White House notice said, arguing that this had undercut the US’s ability to compete.
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
Comments
So why Mexico, Canada, and others made a change?
If this was true, the SP500 would be down at least 10%...but it's close to the top.
Another TDS thread.
Please use the off topic forum.
The market has tuned this all out thus far. If inflation remains sticky, can US stock prices continue to rise?
The idea that there is nothing to study is disturbing. These policies will have consequences. Our economy in 2025 could turn into a lab experiment gone bad, as the lab director pulls all the machine levers at once.....with his eyes closed.
He doesn't care about rising prices b/c he and his cronies can easily afford it. The rest of us? And those rubes who bought into his campaign schtick are going to feel it, perhaps hard ... to which I offer zero sympathy and say "you wanted this, so suck it up buttercup!" (But then again, he doesn't read or do research, so this is probably a cost-savings thing as well...)
He said ANYTHING he could to ANYONE he spoke to on the campaign in order to eek enough votes to win and stay out of prison. Full stop. Now that he's in office, he can sit back, relax, and coast, let the country fall apart, or do whatever he wants because nobody can touch him, and enjoy all the trappings of the office -- especially the constant media attention that he craves.
Relatedly: to those who instinctively jump to bleat 'TDS!' I remind them that so-called 'TDS' works both ways -- imo those in blind thrall to him and/or think he is perfect/wise/infallable in all things and often are unable to stand exposure to questions or criticism of him/his actions are suffering from it the most.
Or, investors are just nuts and consuming large amounts of Hopium these days because YOLO and FOMO and all that...
If he's not paying attention to rates, well, God bless him.
Bessent said last week that the administration is focused on long term (10 yr) rates because that is where capital investments happen and that they are not focused on federal funds rate.
After the last FOMC meeting, Trump said the Fed was correct in not decreasing FF rate.
You get the idea what is going on. His Chief of Staff and Bessent sat him down and told him to stick to the script. Whether you and I like it or not, the Trump economic agenda is highly ambitious and not easy to pull off and requires everyone on the team to be hyper focused. But the self proclaimed stable genius has the attention span and ego of _____.
So, expect Trump to run his mouth on Powell after a few days because when his instincts kick in, it just irritates Trump that he is not able to bully Powell and that will make him look weak in the eyes of old MAGA. Of course, Fox is always ready rile Trump up, the co-dependents in the relationship.