Given this context, it’s not surprising that former President Donald Trump declared a new round of tariffs on foreign imports. This decision has already sent shockwaves through global stock markets. The new tariffs supplement the existing measures. They consist of a 20% tariff on all Chinese imports plus a 25% tariff on steel and aluminum imports. Trump continues to work with his policy team to improve and strengthen his trade strategy. President-elect Trump has promised to negotiate the “perfect deal” on behalf of American workers.
Under the new tariffs, a 25% tariff will be applied on the value of all imported vehicles and auto parts. This amendment goes into effect this Thursday. This announcement makes a bad trade situation even worse. Especially as the relations between the United States and its largest trading partners continue to deteriorate due to ongoing tariff threats.
Trump’s advisers have been urging a much harder line as the campaign makes its final push. Fulfilling the promises he made while campaigning for the presidency, they call for an average 20% tariff across all imports. The Administration’s possible expansion of tariffs like these would just further provoke our closest allies, including Canada. Prime Minister Mark Carney has decried the tariffs as “unjustified” and threatened retaliation in kind.
“The world has been ripping off the United States for the last 40 years and more,” – Donald Trump
On top of that, the U.S. is moving ahead to slap a 10% tariff on energy imports from Canada as well— lowering the boom on bilateral trade relations. One explanation is that Commerce Secretary Howard Lutnick is fervently pro-tariff. He’s pushing for bold, transformational approaches that would radically affect infrastructure, housing, energy, and more.
As with so much about Trump’s tariffs, his objectives are much wider than raising revenue. He deeply desires to return our manufacturing base to the U.S., combat the unfair trade practices perpetrated by other countries, and focus on tougher action against both migration and drug trafficking. Economists warn about the unintended consequences that might result from these tariffs.
Neel Kashkari, the president of the Minneapolis Federal Reserve, had a provocative suggestion. He indicated that the drop in consumer confidence may have a larger impact than the tariffs.
“It’s conceivable that the hit to confidence could have a bigger effect than the tariffs themselves.” – Neel Kashkari
Many Americans express concerns about how such tariffs will affect prices, as businesses are likely to pass increased costs onto consumers.
Indeed, business leaders are already telegraphing their plans to increase prices. Groundwork Collaborative CEO Alex Jacquez described this shift as an adaptation to the new trade landscape.
“CEOs are consistently saying they want to hike prices,” – Alex Jacquez
As markets react to these announcements, stock sell-offs have become prevalent, signaling investor anxiety over the economic implications of heightened trade restrictions. The European Union has already announced plans to retaliate aggressively to those suggested tariffs. Then it has most recently declared that its “strong plan” in retaliation is prepared.
In what might be a glorious coincidence, Trump is indeed set to explain his tariff genius further in speech at 4 PM ET today. His administration continues to refine its stance on trade as it navigates complex relationships with global partners.