Tariffs: Trump Signals Imminent Action, Delays Specific Measures

Executive Orders Signed, Details Pending

President Donald Trump's return to the White House saw no immediate implementation of major tariffs, but he hinted at significant new duties to come. While signing executive orders in the Oval Office, he stated, "We are thinking in terms of 25% on Mexico and Canada," adding that they could be implemented as early as February 1st.

Trump acknowledged ongoing negotiations with China but declined to provide specifics on new tariffs. He emphasized, however, that tariffs remain on the table, including as a potential response to China's handling of the TikTok divestiture deal.

Initial Delay and Market Reaction

Trump's initial delay in implementing tariffs was likely intended to minimize market volatility, although experts cautioned that it did not signal a lack of imminent trade action. Market reaction was mixed, with S&P 500 futures rising and the US dollar index dropping initially but later spiking on Trump's evening comments.

Trade Policy Objectives

During his inaugural address, Trump vowed to overhaul the trade system and "tariff and tax foreign countries to enrich our citizens." Experts predict that a trade war over the next four years is likely, particularly with China.

Potential Legal Challenges

Trump has considered invoking the International Emergency Economic Powers Act to justify enacting tariffs. This law provides broad authority to a president during national emergencies but has not been extensively tested in court, potentially opening it to legal challenges.

Other Tariff Options

Trump could also use Section 301 or Section 232 tariffs, which have been more legally tested but may limit the speed and aggressiveness of his actions.

External Revenue Service

Trump also touted plans for an External Revenue Service, arguing that the anticipated tariffs would generate substantial revenue for the Treasury.

Expert Commentary

Experts caution that significant volatility and market reaction are still expected, despite the initial calm on Trump's first day back in office. They predict a surge in the US dollar and US equities during his first year in office.