Trump's Tariff Deadline Looms, Uncertainty Weighs on Economy
WASHINGTON, DC - On Thursday afternoon, President Donald Trump reiterated his plans to impose a 25% tariff on imports from Mexico and Canada, adding to the uncertainty surrounding the February 1 deadline. However, Trump also acknowledged that certain provisions remain undecided, including whether the tariffs would extend to oil. "We may or may not," he told reporters at the White House.
The latest comments come amid a series of confusing statements from the president and his nominees, leaving many in "wait-and-see" mode. Charles Schwab's Kevin Gordon warns that the uncertainty could impact business decisions, citing the recent trade war with Colombia.
Leaders in Canada and Mexico have expressed frustration over Trump's plans, promising similar measures in response. China could also face 10% duties on trade.
Commerce secretary nominee Howard Lutnick has provided contradictory statements, initially expressing support for broad tariffs but later suggesting they could be lifted if Mexico addresses migration and illegal drugs.
The lack of clarity has left a wide range of officials, including Fed Chairman Jerome Powell and Mexican President Claudia Sheinbaum, monitoring the situation closely. Economists project that full implementation and maintenance of the tariffs could lead to recession in both Canada and Mexico.
Deutsche Bank economist Matthew Luzzetti anticipates inflationary pressures and reduced growth if the tariffs are imposed on Canada and Mexico. Tobin Marcus of Wolfe Research suggests that the duration of the threats should also be considered, as Trump may be less likely to tolerate economic pain in the long term.
While there is still uncertainty about Trump's intentions, Marcus believes the president remains determined to implement tariffs eventually. The Financial Times reported that Treasury Secretary Scott Bessent is advocating for a more market-friendly plan with lower initial tariffs and a gradual increase, but Trump has dismissed this proposal.