Trump builds a tariff wall
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Illustration: Sarah Grillo/Axios
There is a wrecking ball coming for the norms of global trade.
- President Trump is expected to disrupt the largely friendly economic relationship between our North American neighbors with high tariffs that would blow up his own trade deal.
- He plans to up the ante on U.S.-China trade relations too and pledged more tariffs ahead.
Why it matters: Trade policy moved more slowly in Trump 1.0. The measures send a warning that this time tariffs will be broader, implemented faster and wielded to notch economic wins.
Between the lines: The trade orders expected Saturday put Trump's presidential campaign promises into motion.
- He will lean on untested powers — which might be tested in court — to impose tariffs and reshape trade in a way he believes will better serve the nation.
- Trump made a quick comment to reporters in the Oval Office Friday, one that offered an important peek into his trade war philosophy. He described putting up "a wall" to help shut out foreign competition and bring production of certain goods stateside: "The wall is a tariff wall."
The intrigue: The gamble risks damaging the economy and knocking the stock market boom off course. Then there are the unknown effects that might come from retaliatory measures.
- The expected tariffs hit 40% of U.S. imports, from avocados to auto parts to oil.
- Trump says the tariffs are a response to the incoming flow of fentanyl. In the case of Canada and Mexico, he claims insufficient control over immigrants entering the U.S.
- The tariff off-ramp is unclear; unlike Colombia, Trump said he isn't looking for concessions.
What they're saying: Trump's election win was helped by inflation-hating voters. The tariffs risk aggravating a problem he pledged to fix.
- Trump conceded "there could be some temporary short-term disruption, and people will understand that," a tacit acknowledgement that as tariffs come on, prices will rise — which he had just denied moments before.
Threat level: More than 60% of imported vegetables are from Mexico as of 2023, according to the Department of Agriculture.
- Even if a vehicle is manufactured stateside, the auto sector relies on inputs from Canada and Mexico.
- It's unclear how the higher cost of those goods will ripple through the supply chain — or if companies can adjust quick enough to skirt it.
- The Tax Foundation says tariffs on Canada and Mexico are like an additional $670 annual tax on U.S. households.
