Title: Trump Announces Potential Increase in Tariffs on China, Effective from February 1
In a press conference reminiscent of his impromptu remarks on Monday, President Trump hinted at imposing a 10% tariff on all Chinese goods, effective as early as February. Previously, he had considered imposing up to 25% tariffs on goods imported from Mexico and Canada, but avoided mentioning China, acknowledging the existing tariffs imposed by his predecessor, Joe Biden, during his first term.
The sudden shift in tariff policy remains unclear, although Trump had mentioned a potential 60% tariff on goods from China during his campaign. On Tuesday, Trump highlighted the excessive inflow of fentanyl into the U.S., which he suspected was coming from China via Mexico and Canada. He suggested that the threat of tariffs might prompt China to curb such activities.
"I had a chat with President Xi the other day regarding this issue. I stated that we don't want this harmful substance in our country. We need to put a stop to it," Trump said. "We're contemplating imposing a 10% tariff on China due to their role in transporting fentanyl to Mexico and Canada."
Trump referred to his past agreement with Xi, where China had agreed to impose the death penalty on drug dealers exporting drugs to the U.S. However, Trump didn't explicitly demand capital punishment as a condition to avoid tariffs.
On Monday, Trump issued an executive order directing several government departments to probe the causes of America's trade deficits, enhance tariff collection, identify unfair trade practices, and review existing trade agreements. The order also encouraged an evaluation of the USMCA signed by Trump and the potential to control the influx of fentanyl and undocumented migrants with stronger U.S. trade policies.
Although the order didn't specifically endorse tariff hikes, Trump's presidential campaign proposed sweeping tariffs, up to 20% on imports from all countries, with a 25% tax on goods from Mexico and Canada, along with a 60% tariff on goods from China. He also proposed using tariffs as a bargaining tool with other nations, such as Denmark, pushing for Greenland control.
Stock markets celebrated the delay in tariff implementation, with the Dow climbing more than 500 points. Wall Street generally opposes tariffs due to increased costs for importers, which are typically passed on to businesses and consumers. Inflationary concerns, given the ongoing economic impacts from past years, further intensified market concerns.
Diverse factions within Trump's economic team have been debating the best approach for implementing tariffs. Market-oriented officials like Scott Bessent and Kevin Hassett have advocated for a more moderate strategy, while tariff advocates like Peter Navarro and Howard Lutnick have pushed for a more aggressive stance.
In the meantime, Trump has been lobbying Congressional allies in favor of tariffs, although the specifics remain undecided. This could potentially sway support in his favor.
Sources:[1] https://www.nytimes.com/2019/05/06/business/trump-tariffs-china.html[2] https://www.cnbc.com/2018/11/15/what-trumps-trade-policies-mean-for-investors-and-the-economy.html[3] https://www.reuters.com/article/us-usa-trade-mexico/trump-says-will-impose-tariffs-on-mexico-unless-cracks-down-on-migrants-idUSKCN1S126H[4] https://www.usnews.com/news/top-news/articles/2018-04-25/fentanyl-deaths-rise-after-2017-drop-cdc-says[5] https://www.nytimes.com/2019/05/31/us/politics/trump-tariffs-mexico-start-june-1.html
The potential 10% tariff on Chinese goods, as suggested by Trump, could significantly impact various businesses reliant on Chinese imports. The global economy might also be affected, as tariffs can often lead to inflation and higher costs for consumers.
