USA TODAY
WASHINGTON − President Donald Trump reversed course and will no longer double tariffs on steel and aluminum imports from Canada, Peter Navarro, the White House’s senior counselor for trade and manufacturing, said Tuesday. The abrupt shift was a response to Ontario Premier Doug Ford saying he would suspend a 25% electricity surcharge on about 1.5 million U.S. energy users in New York, Michigan and Minnesota.
Trump had hinted at the reversal Tuesday afternoon, and Navarro confirmed it, saying Ford and Commerce Secretary Howard Lutnick "had a cordial discussion, and Mr. Ford, in his wisdom, decided to back away from his electricity surcharge of 25%.”
Trump's turnabout came after he said Tuesday morning that he would be doubling tariffs on Canadian steel and aluminum imports, set to go in effect Wednesday, from 25% to 50%. With Trump backtracking, the steel and aluminum tariff rate for Canadian imports will remain at 25%.
Trump downplayed the impact of his tariff threats on the plunging stock market. He has argued the tariffs are needed to help rebuild the U.S. manufacturing sector.
"Markets are going to go up and they're going to go down. But you know what? We have to rebuild our country," Trump told reporters gathered on the White House South Lawn as he promoted Tesla vehicles alongside Elon Musk, CEO of Tesla and a senior White House adviser.
Trump defends tariffs, suggests they might increase
Trump defended his use of tariffs in remarks Tuesday to business leaders in Washington following another day of tariff threats and a sudden reversal – and suggested higher fees could be on the way.
Speaking before The Business Roundtable, Trump touted a “renewed spirit” in the U.S. manufacturing sector because of his tariffs on imports, even as the new duties have seen the stock market plunge.
“They don't want to pay 25% or whatever it may be,” Trump said of companies, referring to the rate he wants to set on imports from Canada and Mexico as well as all steel and aluminum imports. “It may go up higher. Look, the higher it goes, the more likely it is they’re going to build (in the United States).”
Last week, Trump agreed to postpone until early April tariffs on imports from Mexico and Canada that fall under the USCMA, a free trade deal he signed in 2019. They make up 50% of Mexican goods coming into the U.S. and 38% of those from Canada.
Stocks finish lower after day of wild swings
In a wild day of trading, U.S. stocks reversed course late Tuesday after Ford said he would suspend the electricity surcharge. Stocks closed lower but cut their steep early losses, which were initially prompted by Ford's threat of adding a 25% fee to U.S. electricity users in three border states, followed by Trump saying he would retaliate by doubling tariffs on Canadian steel and aluminum.
The S&P 500 index ended down 0.76%, or 42.49 points, to 5,572.07. The blue-chip Dow shed 1.14%, or 478.23 points, to 41,433.48. The tech-heavy Nasdaq slipped 0.18%, or 32.23 points, to 17,436.10 after posting its worst day since September 2022 on Monday. The benchmark 10-year yield rose to 4.284%.
Increased fears of recession, higher inflation
The stock market convulsions amid a series of escalating trade moves, including tariffs on Mexico and China, have some economists fearing a recession and the return of higher inflation, which has remained stubbornly above the Federal Reserve’s 2% goal.
Trump would not rule out an economic slowdown in an interview that aired over the weekend. “I hate to predict things like that. There is a period of transition because what we’re doing is very big," Trump said in an interview that aired on "Sunday Morning Futures With Maria Bartiromo."
Several companies − from retail giants Walmart, Kohl’s and Dick’s to airlines such as Delta and Southwest – said they’re bracing for a possible slowdown in consumer spending. Consumers account for about 70% of the economy. Recent surveys show consumers growing less optimistic.
Small business sentiment has also been dented. The National Federation of Independent Business Small Business Optimism Index showed sentiment declining and uncertainty over the outlook rising. The Uncertainty Index rose to the second-highest reading in the survey’s history, which dates to 1973.
Report expected to show slightly higher consumer prices
Wednesday’s closely watched report on inflation in February should bring modest relief, but the reprieve may be brief, with Trump’s escalating trade war set to drive prices higher later this year.
The overall consumer price index likely increased 0.3% last month, according to the median estimate of economists surveyed by Bloomberg. That would be a relatively large bump, but it’s less than January’s 0.5% rise and it would lower the annual inflation reading from 3% to 2.9% − still above the Federal Reserve’s 2% goal.
A core inflation measure that excludes volatile food and energy items likely also rose 0.3%, economists predict, down from 0.4% the previous month. That would nudge the yearly increase from 3.3% to 3.2%. The price increases will likely be fueled by familiar culprits such as used cars, auto insurance and eggs, forecasters say.
Although most of Trump’s tariffs have yet to take effect, they’re already affecting businesses’ pricing decisions and pushing some costs higher, Wells Fargo wrote in a note to clients.
What items will cost more for American consumers?
Tariffs are likely to disrupt supply chains and increase the cost of transportation, which will lead to a rise in price for almost everything, Truist head of U.S. economics Mike Skordeles previously told USA TODAY.
"Broadly speaking, higher tariffs will increase import costs, forcing companies to choose between absorbing the hit to their margins or passing it on to consumers," said Madhav Durbha, a supply chain expert and group vice president of consumer-packaged goods and manufacturing at RELEX. "Either way, this creates inflationary pressure and dampens consumer spending, impacting not only individual companies but the broader market."
As previously reported, the U.S. auto industry and a broad array of common imports from Canada to the U.S. could be affected by the tariffs, according to the Bureau of Industry and Security and Trading Economics. For consumers, that could mean higher prices for appliances, cereal, milk products, alcoholic beverages and more.
President Donald Trump warned there could be "some pain" after signing executive orders that imposed stark tariffs on imports from Canada and Mexico and a 10% duty on imports from China, targeting three of America's key trade partners. Keep reading to see some of the items that could be impacted by the tariffs.
No comments:
Post a Comment