If they possessed a modicum of decency and understood the extent of the harm they inflict on their own voters and consumers with their tariff antics, Trump and his associates should resign from their positions, return to their golf courses, and allow ordinary citizens to lead a fearless, healthier, and debt-free life. However, they do not. Consequently, Donald Trump may reverse the tariffs on Mexico and Canada as soon as today, but contradictory statements from his staff are causing significant confusion to consumers and markets.
What we know: We currently know very little, as Trump himself seems uncertain. His recent tariff strategy suggests he intends to maintain the tariffs for now, promoting them to the American public as essential for economic strength. At the same time, Commerce Secretary Howard Lutnick has indicated that these tariffs could be lifted soon. This uncertainty surrounding tariffs is unsettling for markets, the media, and consumers. Analysts are now warning of potential inflationary effects, while businesses are weighing the impact on their investments, consumers are concerned about pricing, and officials are considering the effects on domestic production.
Trump even dared to admit yesterday that there will be "a little disturbance" as America pushed ahead with 25% levies on Mexico and Canada, as well as a 20% hike on China and potential sanctions on the EU to come. He did not clarify whether markets or the American consumer would face the discomfort, but he added: "We're fine with that. It won't be significant."
Because as he so poetically justified, "Tariffs are not just about protecting American jobs, they're about protecting the soul of our country. Tariffs are about making America rich again, and making America great again". So, "It's happening and it will happen rather quickly." Like a quick shot!! No pain at all.
Yet, businesses and consumers are already feeling the Heat! The S&P 500 has experienced several turbulent days following a downturn in Asian markets at the end of last week. Meanwhile, the Federal Open Market Committee is preparing for an inflationary impact on consumers, as many goods and services enjoyed by the public are imported and are likely to increase in price.
While President Trump framed the turbulence as a necessary by-product of his broader policy, Commerce Secretary Howard Lutnick is already anticipating and promoting a potential turnaround, stating that the tariffs on Canada and Mexico could be lifted as soon as today.
Why now? Is this just another lie or a feeble excuse to protect one's image in light of foolishness? The tariff war started months ago when the U.S. sought immediate action on illegal immigration from its two neighboring countries, as well as efforts to reduce the flow of drugs like fentanyl across the borders. What has changed since that initial claim was made?
Well, Secretary Lutnick said work on the border had been satisfactory but drugs were still a problem. "The fentanyl deaths are just not declining in the way we expected," Lutnick told Fox News in an interview last night. "Both the Mexicans and the Canadians were on the phone with me all day today trying to show that they'll do better and the president's listening because…he's very, very fair and very reasonable.
And apparently, very dumb, something that only half the population can see right now. So, here comes the latest excuse: "I think he's going to work something out with them—it's not going to be a pause, none of that pause stuff—but I think he's going to figure out: 'You do more and I'll meet you in the middle somewhere' and we're going to probably be announcing that tomorrow."
And when pushed about whether that would mean tariffs being pulled back from 25%, Lutnick responded that President Trump is looking at the United States–Mexico–Canada Agreement (USMCA). "He's really looking carefully at that trying to figure out is there a way in there that he can come in the middle where he'll give the Canadians and Mexicans something, but they've got to do more," Secretary Lutnick added.
Adding uncertainty to Trumpian chaos
While the differing rhetoric from Trump and Lutnick may attempt to calm tensions, it adds to the uncertainty for analysts.
Paul Donovan, the chief economist at UBS Global Wealth Management, wrote in a note seen by Fortune this morning: "Trump suggested that trade tariffs might create 'a little disturbance,' which indicates a commitment to continue taxing U.S. consumers. However, there appears to be a hint of retreat from U.S. Commerce Secretary Lutnick, who indicated that the tax burden on consumers purchasing Canadian and Mexican products might be reduced as early as today."
And added: "Uncertainty is a management style, but there are consequences. Corporate investments and household savings are in part determined by certainty around expectations for the future.
"More visible taxes (e.g. an avocado tax or a propane tax) have the power to affect consumer behavior more quickly than less visible taxes (e.g. aluminum taxes)."
On corporate investment, at least, Goldman Sachs had some better news from analysts.
In a note released before the introduction of Trump's latest tariffs, and amidst growing speculation about their potential duration, Goldman indicated that "surveyed analysts reported elevated policy uncertainty; however, most did not anticipate that firms would delay or cancel investments as a result."
The note added that—per its monthly Goldman Sachs Analyst Index (GSAI)—"Uncertainty related to tariffs, immigration policy, and potential regulatory changes was cited most frequently. "Aside from impacts on investment, analysts suggested that firms might respond to elevated uncertainty or potential policy changes by raising prices or increasing domestic manufacturing and sourcing."
This is precisely what investors want to hear, but it does not resonate with American households.
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