When examining President Donald Trump’s tariff declarations not covered in the second term while in office, it is unclear what was actually achieved.
What’s clear is that Trump’s tariff announcements disrupt global markets, wipe out trillions of value, and many companies are baffled by how to plan for the future amid never-ending uncertainty.
Within days of taking office for his second term, Trump argued that he needed to impose 25% tariffs on most imports in Mexico and Canada, 10% on China, and do more to bring fentanyl and undocumented immigration flows to the United States. He was soon suspended for 30 days in Canada and Mexico, but not in China in return for concessions from borders and law enforcement.
Since then, he has raised 25% tariffs on steel, aluminum, auto parts and auto parts, brought taxes back to Mexico and Canada, and doubled fentanyl-related tariffs on all Chinese imports to 20%.
He then sailed back and forth between tariffs on car imports from Canada and Mexico, and finally settled on 25% global car imports.
Then in April he announced his “mutual” tariffs in dozens of countries around the world, accompanied by a baseline tariff of 10% in all countries around the world. He hit blood on Wall Street and suspended “mutual” tariffs for 90 days, but maintained a 10% global tax and enacted a 145% tax on China.
Rollback
Soon after that, Trump began rewinding some tariffs as the US launched a trade deal. The first came last week in the form of a limited trade agreement with the UK. The UK had enforced 10% collection on many products, but it reduced US tariffs on British car imports to 10% from the current 27.5% to acquire annoying US car manufacturers.
But the person everyone was watching this Monday came on Monday. The US and China have announced a 90-day suspension and tariff scale.
But even before the May 12 announcement, the US had already opened up exceptions to smartphones, computers and other high-tech products.
Then, following Monday’s agreement, it also reduced tariffs on low value, “de Minimis” imports from China, cutting from 120% to 54% of items worth up to $800. Such items were previously brought to the US with minimal inspection without the need to pay import duties.
Such imports were not only accused of flooding the country with cheap products, but also accused of being used by traffickers to bring in drugs containing fentanyl. Fentanyl trafficking was justification for the first tariffs imposed on China, Mexico and Canada, so it is not clear whether the US government is still concerned that the route could be potentially abused by drug transport.
While various tariff rollbacks and suspensions are welcomed by businesses, rest does not completely remove uncertainty. A short tariff suspension is not enough for many companies to make long-term investment and supply chain decisions.
The sacrifice to the economy
As we reported last week, it is a small business that employs 45.9% of the US workforce and accounts for 43.5% of the US gross product (GDP).
There is fear that uncertainty is hurting the US economy. A Bloomberg economist poll showed that next year there could be a recession of nearly 50-50, the media reported Monday.
And while inflation has been curbed so far, consumer prices have risen 2.3% in April from 2.4% in March – economists expect inflation to rise by mid-year, with consumer confidence reaching 13-year lows even before empty prices return.
Trump has acknowledged the possibility of price increases. Children in the US will “have two dolls instead of 30 dolls. So two dolls will be a few dollars more expensive than usual,” he said recently. But even though some companies have announced billions of new investments, some have recycled where he is heading with his tariffs and other previous investments. This, as Apple’s February announcement, will invest $500 billion in the US over the next four years, but the analyst said it includes current commitments.
But it’s more of a ledger issue for the next few years than ground work.