Trump's day of clarity, but without the clarity
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The new consensus among business owners and economists is that President Trump's colossal trade announcement Wednesday is just the start, not the end, of global economic uncertainty.
Why it matters: Many once hoped the much-hyped reciprocal tariff announcement would settle worldwide economic confusion.
- Now the fear is that recent weeks' trade drama — tariff flip-flops and policy hanging in the balance — will stick around for the next four years.
- It is a backdrop that makes long-term planning impossible, a separate risk for a teetering economy.
Today's tariff news "will not bring the level of certainty that businesses need to make hiring and investment decisions," Joe Brusuelas, chief economist at accounting firm RSM, wrote on "Liberation Day" eve.
The big picture: Trump, in a Rose Garden event this afternoon, could announce tariffs as high as 20% on almost all imports, the Washington Post reports.
- With other tariffs implemented this year, that would bring the effective U.S. tariff rate to almost 33%, the highest since 1872, according to the Budget Lab at Yale.
- The previously announced tariffs on foreign-made cars, as well as levies on goods from Canada and Mexico, are also set to take effect.
- Economists expect swift retaliation from trading partners.
Between the lines: Manufacturers anticipate they will be left with a slew of questions, including the biggest — how long the reciprocal duties last.
- It's a challenge for the Trump era, where policy can change direction on a whim. It's flat-out unanswerable on a longer-term basis.
What they're saying: "What this tells me to do is to be very careful with my long-term investments," says Randy Carr, the owner of Florida-based World Emblem, a second-generation family business that makes patches for retailers like Levi's.
- "If you're a business that brings manufacturing back to the States and all of a sudden we open free trade back up, those people who moved are going to get crushed," Carr tells Axios.
Trump and other White House officials send conflicting messages about the reciprocal tariff endgame — all of which muddle whether this posture is the new normal.
1. Tariffs as a pay-for: "Tariffs are going to be a really important part of the tax cut discussion," senior trade adviser Peter Navarro said earlier this year, suggesting the levies would need to stick for tax revenue purposes.
2. Tariffs as negotiating tactic: "If a Country feels that the United States would be getting too high a Tariff, all they have to do is reduce or terminate their Tariff against us. There are no Tariffs if you manufacture or build your product in the United States," Trump wrote on Truth Social recently, signaling the possibility of a tariff reprieve down the line.
3. Tariffs to bolster domestic manufacturing: "We're going to bring the companies back," Trump told Bloomberg last year.
- That might mean keeping tariff pressure on long enough to push businesses to re-shore, though if Trump is successful, it would cut into the expected revenue from tariffs.
What to watch: Some economists still bank on the "Trump put" — the idea that the White House would pull back on tariffs if the economy languishes.
- That has not been the case yet: the stock market has plummeted and business anecdotes point to sluggish demand and higher prices.
- Yesterday, the Rose Garden event was bumped an hour later to 4 p.m. ET — after the stock market closes.
