A month ago, President Trump announced he would sign a last-minute contract 30 days late, before charging cleaning fees for imports from Canada and Mexico.
This week, after the market revolts when tariffs were introduced, Trump bodes welling them with a month's recession for the automakers.
And on Thursday he opened up even broader exemptions for many other products imported north and south by American neighbours after intense lobbying from business groups that warned of rising prices.
Trump bounced back last month or so between imposing tariffs that would be wiped out on imports from Canada and Mexico, and delaying them due to last-minute deals.
“It's going to happen,” he said, “There's always change and adjustment.”
Despite Trump's claim that “tariffs” is one of his favorite words, waffles over import obligations reflect the reality that sudden import taxes are not an antidote to all policy issues facing the country.
Trump's economic advisers continue to argue that tariffs are part of a broader agenda that doesn't undermine the economy. However, delays and loopholes reveal that the economy is showing signs of tension and that consumers are beginning to see the risk of stealing tariffs when they are still upset from inflation.
Trump himself has begun to admit it like that. “There may be some interference, a bit of disruption,” Trump said Friday.
“The appeal of tariffs as a powerful tool to achieve various economic and geopolitical objectives, contrary to the harsh reality that tariffs can cause disruption in domestic production and supply, causing price supplies and undermine economic growth, says Eswar Prasad, a professor of trade policy at Cornell University.
“Trump is undoubtedly reluctantly forced to recognize that tariffs will have a major negative impact not only on US trading partners, but also on the US economy and financial markets.”
The US stock market headed for one of the worst weeks of Friday in months after a series of eye-opening policy shifts on tariffs from the White House. The S&P 500 went on to its third consecutive week of losses and its worst weekly course since September.
Despite solid employment numbers on Friday, other economic indicators of consumer and business trust have been volatile in recent weeks due to uncertainty around tariffs and fear that they could promote inflation.
Goldman Sachs economist updated its economic growth forecast on Friday, saying it expects tariffs to be higher than growth. Trump has repeatedly said that more tariffs are ongoing despite his latest suspension.
“Large tariffs could hit GDP harder through tax-like effects on disposable income and consumer spending, as well as the impact on corporate financial position and uncertainty,” the economist wrote.
Federal Reserve Chair Jerome H. Powell on Friday suggested that tariffs will clash with retailers and consumers as well as exporters and importers.
While central banks usually tend to “prospect” or not respond to one-off increases in prices due to tariffs, Powell suggested that a series of shocks could guarantee a different response.
And what's affecting their decision is the fact that inflation is still above the Fed's 2% target, following the surge in prices after the pandemic. Given this uncertainty, Powell said the Fed is not in a hurry to change interest rates. Interest rates range from 4.25% to 4.5%.
Trump is expected to enact mutual tariffs on imports from countries around the world on April 2nd. He has already imposed an additional 20% tariff on all Chinese imports, suggesting that European Union products are next.
The Trump administration received a major push from industry this week with its tariffs. Farmers, metal makers and textile companies are all protesting taxation. On Tuesday, General Motors executives Stellantis and Ford told Trump that they would wipe out profits by putting tariffs on Canadian and Mexican cars and Mexican parts by spending billions of dollars of new expenses.
Trump said he suspended tariffs due to the request, but said he doesn't seem to be imposed more on his plans. “They are very pleased with what's going on,” he said Friday about the car maker. “They don't have to cross the border,” he added: “We don't want that. We want them to be made here.”
Scott Lincicom, vice president of economics and trade at the Cato Institute, said the Trump administration is succumbing to the fact that tariffs are taxes that hurt American manufacturers who make products in Canada and Mexico purchased by US consumers.
“Everyone talks about American consumers getting injured by protectionism,” Lincicom said. “This is finally beginning to reach power.”
Trump's top economic aides looked brave this week to protect tariffs, even as they discussed ways to curb them in the face of market rebound.
Speaking at the New York Economic Club on Thursday, Treasury Secretary Scott Bescent argued that “access to cheap goods is not the essence of America's dream,” and said tariffs could cause “one-time price adjustments.” Bescent has previously called for Trump tariffs to be introduced in stages.
The candidate who will become Becent's representative Michael Folkender reflected Becent's remarks at a confirmation hearing on Thursday. He argued that currency fluctuations and price reductions by Canadian exporters would dampen some of the impact tariffs have on American consumers.
“Some of that might find a way to price with a one-off adjustment,” Faulkender told Sen. Peter Welch, a Vermont Democrat. “If the Canadian government ends up making changes to allow the president to release those tariffs, you won't be able to see it appear in the prices.”
Trump's willingness to ease his tariff threat in the final moments hopes investors and analysts will continue to show restraints on future trade measures in the face of lobbyists and unrespecting market pressure.
But Kevin Hassett, director of the White House National Economic Council, dismissed the idea that Trump wasting his tariff leverage.
“He really doesn't like the word 'exemption',” Hassett said outside the White House on Friday. “If I come in and offer a waiver, I'll probably get kicked out of the office. We'll see what happens.”
Anna Swanson and Colby Smith contributed the report.
