Tariffs and Trump's Trade Policy

President Donald Trump intends to reshape US trade policy with tariffs. Prior to and upon his reelection, Trump has issued numerous tariff threats. Some are significant, such as his proposed 60% tariff on Chinese goods and 200% on Mexican car imports.

The scope and scale of these threats have fluctuated, depending on whether Trump or his advisors make the announcements. This volatility has left US businesses and international trading partners, including Canada, Mexico, the European Union, and China, uncertain about future developments.

Tariffs may also impact inflation by potentially raising prices. This could influence interest rate decisions by the Federal Reserve in the coming months and years.

Trump has stated that these threats could become policy as early as February 1st, which he reiterated at the White House on Thursday.

Recent Developments

Canada

- Canada's foreign minister warns that disrupting trade with Canada could force the US to import oil from Venezuela, a geopolitical rival.
- Canada has prepared retaliatory tariffs on US goods, such as steel and orange juice, in response to Trump's proposed 25% tariffs.

Mexico and Canada

- Trump reiterates his threat to impose 25% tariffs on Mexico and Canada, but considers excluding oil imports.
- Uncertainty surrounding the implementation of tariffs has put officials, including Fed Chair Jerome Powell, in a wait-and-see stance.

Global Impact

- A self-imposed February 1st deadline for tariffs on Canada, Mexico, and China is approaching.
- Economists and world leaders are struggling to plan amid the uncertainty created by Trump's tariff threats.
- The unpredictable nature of Trump's policymaking could be affecting business decisions, according to Charles Schwab's Kevin Gordon.

Trump's Tariff Strategy

- The president's Commerce secretary nominee, Howard Lutnick, advocates for "across the board" tariffs to address various economic concerns, including protecting US leadership in artificial intelligence.
- Lutnick believes that export controls on AI without tariff support would lead to "a whack-a-mole model."