President Trump put the brakes on plans to impose widespread tariffs soon after taking office, delaying and toning down efforts to change the U.S. trade system that had been a centerpiece of his campaign.
President Trump began his second term with a memo directing federal agencies to investigate U.S. trade relationships with China, Canada, and Mexico, but he also announced new tariffs on U.S. individuals who import goods from abroad, No tax was imposed on companies.
The memo, first reported by the Wall Street Journal, aims to advance President Trump's 2020 U.S.-China trade deal and looks ahead to a 2026 review of the most recent NAFTA agreement with Canada and Mexico. However, the order stops short of imposing new import taxes.
The memo's summary states that governments will evaluate the latest NAFTA agreement and “make recommendations” regarding the U.S.'s participation in the agreement, the newspaper reported.
This is very different from the trade rhetoric used by President Trump during his campaign.
“On January 20th, as one of my first of many executive orders, I ordered Mexico and Canada to impose a 25% tariff on all products imported into the United States and their ridiculous opening of borders. I will sign all necessary documents,” President Trump wrote on social media. It was featured in the media in November after the election victory.
President Trump has frequently criticized the establishment's thinking on trade agreements and has suggested that a review of U.S. trade principles is underway through the imposition of general tariffs, which were the first step in the post-World War II era of tariffs and trade. It has not been widely attempted since the establishment of a general agreement on
“It's hard to talk about tariffs being negative for 25 years and then have someone explain to you that you're completely wrong,” Trump told Bloomberg Editor-in-Chief John Micklethwait in an October interview. “Let's do it,” he protested.
The president can issue tariff orders without Congressional approval, and there was strong speculation that Trump would single-handedly change the trade system overnight.
Mexican steel producers issued a statement Friday saying they do not pose a threat to U.S. companies.
“Steel exports from Mexico are not a threat to the United States. On the contrary, the United States greatly benefits from steel trade flows,” said Conacero, a Mexican steel trade association.
The Federal Reserve also said in December that uncertainty over the U.S.'s trade stance was clouding the economic outlook, calling for the creation of multiple scenarios.
“The impact of changes in trade policy may be greater than staff had anticipated,” the Fed's December minutes stated.
Uncertainty was also emerging in overseas markets.
“Foreign financial market pricing reflects weaker-than-expected foreign data releases, expectations for further policy easing by foreign central banks, and potential changes in U.S. trade policy,” Fed meeting participants said. pointed out.
Markets and industry groups working on international trade appear relieved by the decision not to immediately impose new tariffs.
The Dow Jones Industrial Average, a major U.S. stock market, rose more than 300 points in afternoon trading. The tech-heavy Nasdaq Composite Index rose more than 290 points, while the S&P 500 Index rose nearly 60 points.
The retail industry, which sources much of its goods from countries with much lower labor costs than the United States, said it welcomed President Trump's new trade approach and wanted to make sure it was “carefully targeted.” Ta.
“We look forward to working with the President to ensure that the resulting policy changes are carefully targeted and create an environment that attracts investment and protects critical industries,” the National Retail Federation said in a statement Monday. “There is,” he said.
The National Foreign Trade Council, a business advocacy group, said U.S. companies want to maintain access to foreign markets.
“U.S. companies need to maintain their competitive advantage globally and access open markets,” the group said in a release Monday. “We look forward to working with the administration on the details of its economic strategy, including trade, tax and customs policies.”
Mr. Trump's intense campaign on tariffs allowed him to tap into an underlying discontent with the globalized economy and deliver a clear and repeated message likely to bring about change in the election.
President Trump, who made import taxes the cornerstone of his economic policy during his first term, called “tariffs” “the most beautiful word in the dictionary.”
Tariffs are taxes imposed on U.S. companies that import foreign products. The tax, which can squeeze importers' profit margins, can be avoided by switching to domestic supply chains or passed on to retailers in the form of higher prices.
The latter option would further raise concerns that President Trump's tariffs could contribute to short-term inflation, with rising labor costs stemming from the new Congress' expected stimulus tax cuts and immigration crackdowns. There are growing concerns that the situation may worsen further.
But President Trump's lack of immediate action on tariffs likely bodes well for the pace of price growth.
In his inaugural address, President Trump said he wanted to bring manufacturing jobs, which are largely outsourced to foreign production sites, back to the United States, representing another point of economic dissatisfaction for many voters.
Manufacturing jobs are is in decline It began to decline in the late 1970s, but began to decline in earnest in the 2000s following the passage of a series of “free trade” agreements. There was a slight recovery in the 2010s, with employment reaching a recent high of around 13 million, but it has not yet reached historic levels.
Rapid increase Manufacturing construction investment This trend may be reversed to some extent during the Biden administration. That figure had hovered around $6 billion a year, but jumped to more than $21 billion in October following the passage of major infrastructure legislation, the Climate Change Technology Act, and the Semiconductor Production Promotion Act.
