What Trump is doing is best captured by what FT quotes Lutnick as saying. Tariffs are, for Trump, merely a negotiating tool. The criteria for all of Trump's big sticks is purposely vague. How much immigration is too much? How much fentanyl reduction is too little? Where exactly is "in the middle"?Withholding the yardstick allows Trump to declare victory whenever he wishes. That is what he wants.
Using tariffs to achieve results on unrelated purposes is "very dumb" as Canadian PM Trudeau said today because they are hurting the U.S. economy, corporations, and consumers even now, even on the first day, even with just the threat. Market economies, corporations that operate in them, and consumers need predictability to make economic decisions. Does a company announce an expansion? Do young couples buy a house? Do they trade in their car for a better one? These decisions and a million others are made on rational economic outlooks, what the interest rates will be, what the market for their manufactures will be, what food costs, whether their jobs are stable, whether they can expect predictable raises, what inflation will be, in a word: trust. Trump is making all of these decisions harder, making predictions guesswork, introducing uncertainty where stability is needed.
Even if Trump rolls back these tariffs, he will have debased the coin of the realm, trust. There are no criteria that can be gauged. "In the middle" is wherever Trump says it is. In a month, if he rolls back the tariffs and declares victory, does that company expand? Does that young couple buy that house? Does the middle class family buy that new car or take that planned vacation? Countries, corporations, households and individuals cannot trust Trump.
People are getting hurt.
People are getting pissed, too. Speaker Mike Johnson has advised his Republican House colleagues not to hold town hall meetings when they go back to their districts. People have lost their jobs from Trump's criteria-less cuts in the federal work force and are angrily confronting those they elected. Trump is one of those, too.
Trump could meet Canada and Mexico ‘in the middle’ on tariffs, Lutnick says
Trump’s Tariffs Sets Off Day of Anger, Retaliation and Market Unease
Global markets fell after steep U.S. tariffs on China, Canada and Mexico went into effect, and as the possible ramifications of a global trade war set in.
Stock markets in the United States and Europe fell...
The president, however, showed no signs of retreat.
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“Please explain to Governor Trudeau, of Canada,” Mr. Trump wrote, employing his frequently used jab at the prime minister, “that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!”
President Donald Trump’s blanket 25% tariffs on Mexico and Canada took effect on Tuesday, an extraordinary action aimed at bringing America’s top trading partners to heel. But it threatens to weaken the North American economy, including that of the United States, at a time of significant stress for inflation-weary consumers.
Trump also doubled the tariff on all Chinese imports to 20% from 10%. Those duties sit atop existing tariffs on hundreds of billions in Chinese goods. China and Canada immediately retaliated with tariffs on American goods, threatening to ignite a damaging trade war. Mexico said it would announce retaliator measures Sunday.
