6 December
Decoding Trump’s tariff threats
(Politico) At first blush, Trump appears to be upping the ante on tariffs during the presidential transition. In the past two weeks, he’s threatened 25 percent tariffs on Canada and Mexico, promised to add 10 percent to China tariffs already in place, and even promised whopping 100 percent duties on BRICs nations — developing countries including Brazil, South Africa, Russia, India, China — if they try to create a rival currency to the U.S. dollar.
Those could be signs of a more aggressive tariff policy, as promised on the campaign trail. But read between the lines and some trade observers think the threats show that Trump could be turning away from his most disruptive tariff plans, like the 20 percent across-the-board tariff that he pledged repeatedly in the run-up to the election.
In those Truth Social posts, Trump is using tariffs as a cudgel for some other issue — to get Canada to crack down on fentanyl, Mexico to stop the flow of migrants, or developing nations to continue using the dollar. And in each of those cases, nations quickly acquiesced to Trump’s demands, with Canadian President Justin Trudeau flying to Mar-a-Lago, Mexican President Claudia Sheinbaum holding a conciliatory call with Trump, and a South African government spokesperson decrying the “misreporting” that has led to the “incorrect narrative that BRICs is planning to create a new currency.”
Notably, using tariffs as a negotiating tool is how establishment Republicans and Wall Street types have been hoping Trump would approach the issue for months — a “sin tax,” as Sen. Kevin Cramer (R-N.D.) called them, which can be quickly threatened, applied, and then removed if the trading partner changes their behavior.
All of that has some Wall Street figures quietly optimistic that Trump’s bark will be worse than his bite on tariffs. Hedge fund billionaire Ken Griffin this week called Trump’s tariff threats “small ball” compared to other geopolitical issues, and macro researcher Marko Papic went further, saying in an email that despite the bellicose language, Trump is more likely to strike new deals than fully apply his campaign trail trade agenda.
“Trump’s brash language might have led some down the fantasy that inflated tariffs are on the way,” said Papic, who provides investment research to asset managers worldwide. “In actuality, it’s all part of his ‘America First’ approach that will see him strike a trade deal with China, and perhaps conditional on the basis that their companies relocate their production facilities to the U.S.”
That sort of negotiation is exactly what many foreign trading partners — particularly developing nations — are hoping for out of a Trump presidency.
Europe in the line of fire as Trump threatens trade war with China
Trump’s punitive tariffs would put Brussels under pressure to cut a defensive deal to fend off a glut of Chinese exports.
(Politico Eu) The U.S. president-elect campaigned on a pledge to impose tariffs of 10 to 20 percent on all imports — and singled out China for punitive rates of 60 percent. He warned of a further 10 percent last week if Beijing fails to stanch the flow of fentanyl into the United States. And days later he upped the ante against China and its BRICS allies by brandishing a 100 percent tariff if they abandon the U.S. dollar.
Although those punches have, for now, been aimed squarely at Beijing, Brussels is coming to realize that it may need to get on board with Trump’s looming trade war against China. The fear is that a flood of Chinese exports would be pushed to Europe by an insurmountable U.S. tariff wall.
As Trump Threatens Tariffs, Europe and South America Strengthen Ties
The European Union and four South American countries have reached an agreement to establish one of the largest trade zones in the world.
(NYT) The European Union reached a major trade agreement on Friday with four South American countries, concluding a long-delayed negotiation that took on new urgency as President-elect Donald J. Trump threatened to impose tariffs on some of the world’s largest economies.
The deal, between the European Union and members of Mercosur — a bloc that includes Argentina, Brazil, Paraguay and Uruguay — would establish one of the largest trade zones in the world and would be the European Union’s biggest trade agreement ever.
With European leaders preparing for the possibility that Mr. Trump’s return to office will lead to a more fragmented global economy, the deal is a significant victory for proponents of free trade, linking markets with more than 700 million people.
4 December
If Trump’s tariffs start a trade war, it would be an economic disaster
Mark Weisbrot
(The Guardian) The president-elect’s two main arguments for his tariff threat – to reduce migration and to combat drugs – are not credible
“To me, the most beautiful word in the dictionary is tariff, and it’s my favorite word,” said Donald Trump last month. Pundits, politicians and financial markets are trying to figure out why, since he announced a week ago that he would impose tariffs on the United States’s three biggest trading partners: 25% for Mexico and Canada, and 10% for China.
One theory is that tariffs can be a beautiful distraction. Trump, more than any previous US president, has fed on distractions for years, both to campaign and to govern. He can move seamlessly from one distraction to the next, like a magician preparing for the opportune moment to pull a coin from where it appears to have been hidden behind your ear.
26 November
Jeremy Kinsman: The Trumpian Tariff Trolling Has Begun
(Policy) [Donald] Trump is determined that his second term be felt by the whole world, and his attack on his neighbours is the opening salvo. The question every leader at international gatherings since Nov 5 – the Rio G20, COP 29 in Baku, and APEC in Lima – has privately asked the others is “How far will Trump try to go to “make America great again?”
Now, Trump has given his first clear indication, by vowing to impose a unilateral 25% tariff on all goods exported to the US by America’s NAFTA partners, and an extra 10% on America’s nominal economic nemesis, China, putting all three top US trading partners in the same adversarial basket.
25 November
Trump Plans Tariffs on Mexico, Canada and China That Could Cripple Trade
(NYT) The president-elect said that he would impose the across-the-board tariffs on Day 1 and that they would stay in place until Canada, Mexico and China halted the flow of drugs and migrants.
19 November
A double whammy of tariffs and strikes is coming for U.S. trade and the global supply chain in early 2025
The expectation that President-elect Donald Trump will implement new tariffs early in 2025 and a labor impasse at East and Gulf Coast ports with a new strike deadline looming has shipping companies gaming out an uncertain supply chain environment.
Logistics firm C.H. Robinson told CNBC it is fielding inquiries about front-loading of freight ahead of potential Trump tariffs.
Inventories are already increasing, according to Everstream Analytics, and the supply chain pull forward may accelerate in December, according to a forecast from Honour Lane Shipping.
(CNBC) Uncertainty among U.S. shippers is escalating into 2025 with the expectation of new Trump tariffs and the possibility of a new ports strike that could begin in mid-January.
Supply chain and logistics executives told CNBC that shippers are now trying to game out the snafus that could be coming in the global supply chain and how much inventory to order. This comes against a consumer backdrop that remains strong but is subject to macroeconomic risks, and an early start to Lunar New Year, a holiday period in Asia during which manufacturing operations halt for as long as a month.
15 October
In Trump’s Economic Plan, Tariff Is ‘the Most Beautiful Word’
(Bloomberg) Donald Trump, the self-proclaimed “Tariff Man,” made it quite clear — if it wasn’t already — that putting punishing duties on imports is the centerpiece of his economic agenda.
“To me, the most beautiful word in the dictionary is tariff, and it’s my favorite word,” the former president told Bloomberg News Editor-in-Chief John Micklethwait during an interview today.
Trump pushed back against critiques from many economists and others that imposing across-the-board tariffs would balloon the deficit and trigger trade wars.
He defended tariffs as a panacea that would force companies to produce in the US, creating American jobs and economic growth, and could be used to bolster the dollar as the world’s reserve currency. The main target would be China, but Trump also included allies like the European Union in his tough trade talk.
“You can do it as a money-making instrument, or you can do it as something to get the companies,” Trump said.