Trump's Economic Agenda: Tariffs on Hold, but Trade War Simmers
President Donald Trump's first day back in office saw no significant action on his signature economic initiative: tariffs. This delay, potentially aimed at minimizing market volatility, has sparked mixed reactions among experts.
While US stock markets remained closed on Monday, S&P 500 futures rose, and the US dollar index retreated from a two-year high, indicating a market relief over the delayed tariffs.
In his inaugural address, Trump outlined his economic plans, promising to "overhaul our trade system" to protect American interests. He emphasized the need to "tax and tariff foreign countries" instead of domestic citizens.
However, a report from the Wall Street Journal suggests that the new administration may initially present its trade vision without immediate tariffs.
"He's kicking that can down the road," said Jon Hilsenrath of Serpa Pinto Advisory. "The markets will appreciate him not imposing tariffs right away."
Experts warn that the delay may be temporary. "There's a fight that's coming," said Ian Bremmer of Eurasia Group. China remains the primary concern, while deals may be possible with other partners.
"We remain skeptical that the US and China will reach any real 'Phase 2'," said Andrew D. Bishop of Signum Global.
Trump's campaign promises included tariffs as high as 60% on China and 20% on other partners. Post-election, he pledged additional duties on China, Mexico, and Canada.
On day one, Trump did not sign the promised 25% tariffs against Canada and Mexico. However, he is considering using the International Emergency Economic Powers Act, which grants sweeping economic powers in response to national emergencies.
Other options include Section 301 and Section 232 tariffs, which are more legally tested but potentially less aggressive.
Analysts at Capitol Economics predict that tariffs are still likely, potentially leading to market volatility. "We suspect a fair degree of volatility will persist," they wrote.
Trump also mentioned plans for an External Revenue Service, suggesting that the anticipated high tariffs would generate significant revenue.