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“President Donald Trump reversed course on Tuesday afternoon on a pledge to double tariffs on steel and aluminum from Canada to 50%, just hours after announcing the higher tariffs, in rapid-fire moves that scrambled financial markets. The switch came after a Canadian official also backed off his own plans for a 25% surcharge on electricity…
“Faced with Trump's 50% tariff threat, [Ontario Premier Doug] Ford agreed to suspend the surcharge and meet with U.S. Commerce Secretary Howard Lutnick in Washington on Thursday. The White House then announced that only the previously planned 25% tariffs on steel and aluminum products from the United States' northern neighbor and all other countries would take effect on Wednesday - with no exceptions or exemptions.” Reuters
Many on all sides are critical of the tariffs:
“Companies including Best Buy, Target, and Walmart have warned that they will have to bump up prices as import costs rise. Moreover, the unpredictability around the implementation of the tariffs has led to chaos in the markets. An index of policy-related uncertainty hit its highest-recorded level, aside from the early months of the coronavirus pandemic. Businesses are less sure of the country’s prospects now than they were after 9/11 or during the housing-market collapse in 2007…
“Manufacturing firms are pulling back on investment; companies are slowing down mergers and acquisitions; firms are downgrading their earnings estimates. The stock market has lost $4 trillion in value, as traders dump equities for safer investments… ‘It takes a little time,’ Trump said of his promised boom. ‘But I think it should be great.’ Instead, we might have a recession. We might have it soon. It definitely won’t feel great.”
Annie Lowrey, The Atlantic
“Commerce Secretary Howard Lutnick said over the weekend that the President’s tariffs would make some foreign products more expensive but ‘American products will get cheaper.’ Huh? Companies that use foreign components will have to raise prices or swallow narrower profit margins. Does Mr. Lutnick understand, well, commerce?…
“Domestic manufacturers that compete with foreign goods will raise their prices to take advantage of the protectionism to increase their margins. A study in the American Economic Review found that consumers paid $817,000 for each new manufacturing job created by Mr. Trump’s washing machine tariffs in his first term. And Mr. Trump is only getting started as he prepares to take his trade war global.”
Editorial Board, Wall Street Journal
“Trump and his allies believe tariffs are the key to all sorts of wondrous economic outcomes that will make America more prosperous. In his speech to Congress on Tuesday night, Trump said that tariffs ‘are about protecting the soul of our country,’ whatever that means…
“But even if you buy those arguments, it should be obvious that tariffs being implemented and then immediately withdrawn (for the second month in a row) will not produce the promised benefits. They won't generate revenue for the government, won't cause businesses to alter their supply chains, and won't stop the flow of illegal drugs. It's the equivalent of looking at a river, declaring your intention to build a dam, and then expecting the river to become a reservoir.”
Eric Boehm, Reason
Other opinions below.
“The market never lies. It is often mistaken… But it always tells you exactly what it thinks. Right now, it is thinking that the stiff tariffs Trump has imposed will cost American companies, and the economy, dearly… In this, they reflect not only the consensus among economists but also the realities facing American businesses and consumers…
“Supporters of Trump’s aggressive moves might retort that he was clear on the campaign trail about his fondness for tariffs. This is true, but it was not clear that there would be sweeping rewrites of trade rules, rather than the kind of modest changes he imposed during his first term.”
Editorial Board, Washington Post
“All these delays and exemptions are good in the sense that tariffs are bad, so fewer tariffs is better. But in terms of its systemic impact on US politics and economics, this herky-jerk ‘here today, gone tomorrow’ approach to trade policy, where favored interests can beg and plead for exemptions, is even worse than the original plan [of across-the-board tariffs]…
“Large incumbent businesses are much better situated to do this kind of lobbying than small businesses or startups. Companies would be diverting time and energy from making products to seeking political favors…
“Meanwhile, the protean nature of Trump’s trade policy prevents businesses from making any kind of plans around it. It’s hard to invest in onshore production to get around tariffs that might or might not happen. And the constant rumors of tariffs are having direct counterproductive impacts.”
Matthew Yglesias, Bloomberg
“Americans want the economy to be strong, and, beyond that, are not especially interested in the details. Telling those who are dissatisfied that the stock market has dropped as the result of tariffs they overwhelmingly oppose that, instead of complaining, they ought to be thankful for Trump’s brilliance is not going to help…
“The people who voted Donald Trump back into office wanted him to bring back 2019. They did not sign up for a trade war with Canada, the resurrection of William McKinley, or an endless game of red light/green light that tanks their 401(k) and makes it harder for their kids to buy a house.”
Charles C. W. Cooke, National Review
“President Trump is doing a lot of good. However, it risks being undone if his Administration cannot avoid a prolonged recession… If the pain lasts too long, do not expect voters to appreciate it. After all, ‘don’t rely on the markets as an indicator of economic health,’ was a phrase repeatedly uttered by the Biden Administration as inflation skyrocketed…
“One way for President Trump to mitigate tariffs and help the economy is to get Congress to pass his tax plan rapidly and make his tax cuts permanent. That would provide the stability that offsets the topsy-turvey world of tariffs. It would provide economic certainty to businesses and incentivize investments. Tax cuts could provide an economic boost with the economy's trajectory trending down. Tax cuts arguably should have come before the tariffs, just like in the first Trump administration.”
Erick-Woods Erickson, Substack
