Trump orders a plan for more tariffs even when inflation warms

Cnn
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President Donald Trump doubled on his extraordinary push for more balanced trade and ordered on Thursday that agencies should investigate plans for new mutual tariffs that could increase America’s revenue – but could also ignite a global trade war and add America’s rebounding inflation problem.

Howard Lutnick, Trump’s nominated trade secretary, said he expects the investigation to be completed by April 1st. It is then up to Trump to decide from April 2, when to adopt any of the new recommended tariffs, he said.

Mutual tariffs were one of Trump’s core campaign -lifter – his method of evening scoring with foreign nations that put taxes on US goods and to solve what he has said is unreasonable commercial practice.

“They charge us a treasure or customs, and we charge them exactly the same,” Trump journalists said on Thursday in the Oval Office before signing the performing act called “fair and mutual plan.”

“No one knows what this number is unless you go for land,” Trump said. By calculating what mutual duty to charge other nations, he said his administration will also take into account nations with value -added taxes, which he felt “far more punishing than a customs.”

Trump said that America needs a more just -in -law trade policy that makes us last more attractive in the market.

“The United States is one of the most open economies in the world, yet our trading partners keep their markets closed to our exports,” according to a fact sheet with the White House describing the executive. “This lack of reciprocity is unfair and contributes to our large and sustained annual trade deficit.”

The message comes as Trump is scheduled to meet with Indian Prime Minister Narendra Modi.

After signing the order, Trump appointed India and said, “They charge more tariffs than any other country.”

Trump and a fact sheet for the action specifically drawn attention to customs duties in India accusing motorcycles from the United States. “I remember when Harley Davidson couldn’t sell their motorcycles to India because of the fact that .. The treasure was so high,” Trump said.

The fact of the fact claimed India “charges a 100% duty on US motorcycles, while we only charge a 2.4% duty on Indian motorcycles.”

Trump said India could potentially avoid new tariffs if they bring more production to the United States.

“If you build here, you have no tariffs at all. And I think that’s what will happen. I think our country will be flooded with jobs, ”the president said.

The United States currently has a weighted average import tariff rate of 2% on industrial goods, according to the US Trade Representative.

Weighted average customs rates consider the value of a country’s import. This means that if one country’s export is subject to customs in another country and they make up a large part of the country’s total import, their weighted average customs rate will be higher compared to another country whose exports account for a small proportion.

Industrial goods, an umbrella category that includes cars, clothing, oil and more, accounts for practically everything the US imports except agricultural products. Half of all industrial goods The US imports have entered the country’s duty free, according to Ustr.

“Our workers and industries carry the majority of unreasonable practice and limited access to foreign markets,” said the White House official, noticing how many countries charge much higher tariffs for US exports. “This situation is unsustainable.”

Tariffs are an important part of Trump’s plan to raise revenue to pay for the expansion of his tax cut in 2017 on top of other promised tax cuts. But the burden of tariffs could ultimately fall on US consumers, economists say potentially worrying self-inflicted wounds as inflation has begun to crawl higher again.

“Prices could rise somewhat in the short term, but prices will also fall,” Trump said on Thursday. “So Americans had to prepare for some short -term pain,” he added.

Importers who pay the tariffs pass on the cost of retailers who then raise prices for consumers. It has left some Trump -talerers stunned and angry, including Wall Street Journal editorialWhich Snarkily asked, “Does President Trump understand money?” And Republican Kentucky -Senator Mitch McConnell in a OP-ED in Courier-Journal Criticized Trump’s tariffs for threatening to inflict on Kentuckian’s high cost.

If Americans are unable to switch to cheaper alternatives as a result of the tariffs, if adopted, they are likely to settle to pay the cost of tariffs, Justin Weidner said, an economist at Deutsche Bank. But it also depends on whether producers, retailers or other companies along the supply chain can absorb any of these costs themselves.

The plans for these new tariffs are aimed at countries with some of the widest trade deficits with the United States as well as differences in tariffs charged to US goods brought into their countries compared to what the United States charges them.

The mutual tariffs endorse the 10% across the tariff tariff, which came into force last week at the top of other tariffs on Chinese goods and stricter 25% duty on steel and aluminum announced by Trump Monday.

If Trump goes forward with the 25% duty on Mexico and Canada, which were pushed back until March 1, the total direct cost of import duties in Chinese, Mexican and Canadian goods would be a tax increase of more than $ 1,200 per year. Years for the typical American household, Peterson Institute Scientists have found. Mutual tariffs are likely to add that amount.

Wall Street seemed largely unaffected on Thursday, with some investors betting that Trump’s bark will be worse than his bite.

The US markets hit session heights, with Dow climbing nearly 400 points (0.8%) after the White House laid Trump’s plan for sweeping mutual tariffs. Nasdaq rose 1.3%and the S&P 500 got 0.8%.

“It’s like everything else: He says something with bombast and then calls back,” said Michael Block, market strategist at the third seven advisers. “We fear the worst and then realize that it is all part of the art of the agreement.”

Block noted that at the last minute Trump was delaying customs scheduled to come into force earlier this month in Canada and Mexico.

Keith Lerner, CO-chief investment manager at Truist Wealth, said investors suspect that tariffs will again be used as a negotiating chip and may not be as serious or immediate as feared.

“It’s not like tomorrow that we suddenly have 50% duties everywhere,” Lerner said.

Even the threat of tariffs can still cause uncertainty that depresses business investments and may cause the Federal Reserve to further delay the cuts of interest.