Impact of Tariffs on Trump's Economic Plans
President Donald Trump's inaugural address hinted at significant economic initiatives, including a focus on protecting American jobs and families through a revamped trade system. While no immediate tariffs were implemented on his first day back in office, the move is widely seen as a temporary delay.
Market Reaction
Despite the absence of immediate tariff actions, S&P 500 futures surged on Monday, indicating market optimism. The US dollar index also fell amidst signs of a potential tariff delay.
Experts' Cautions
Numerous experts caution that the calm could be short-lived, as a "fight is coming" over trade disputes. China remains a primary concern, while negotiations with Mexico and Canada may be more feasible.
Potential Legal Challenges
Trump has the authority to invoke the International Emergency Economic Powers Act, which grants sweeping powers in the face of national emergencies. However, this option faces potential legal challenges.
Other Tariff Options
Alternative tariff routes, such as Section 301 and Section 232, offer more precedent but may limit Trump's aggressiveness.
Economic Forecast
Capitol Economics anticipates tariffs and subsequent market volatility in the near future. Despite the initial calm, the analysis suggests a rally in the US dollar and equities in Trump's first year.
External Revenue Service
Trump emphasized his plans for an External Revenue Service to capitalize on the potential influx of revenue from high tariffs.