President Trump sought to celebrate his new tariff regime and reassure the public about his economic stewardship on Thursday as a trade agenda upending the GOP and the global economic order came into place.
Trump said the tariffs would raise billions for the U.S. Treasury, while Treasury Secretary Scott Bessent argued that foreign producers and big retailers would absorb the costs of the tariffs.
“Tariffs are flowing into the USA at levels not thought even possible,” Trump said Thursday morning.
Stock markets were less impressed.
The Dow Jones Industrial Average closed with a loss of 0.5 percent, falling 224 points, as Trump’s tariffs went into place, while the S&P 500 index fell by roughly 0.1 percent.
The tech-heavy Nasdaq composite closed up 0.4 percent after being up by as much as 1 percent in the morning.
Trump closed the day with an impromptu economic announcement from the White House with the conservative economist Stephen Moore, pushing back on a Bureau of Labor Statistics (BLS) report last week that found the economy gained about 250,000 fewer jobs than previously thought over the last several months.
Moore and Trump showed charts that said job gains were much stronger under Trump than former President Biden, while Trump again suggested the previous week’s numbers had been rigged against them. Trump’s firing of the BLS commissioner who produced the report had come under criticism form liberals and conservatives, who warned it would be difficult to tilt the data.
The aggressive defense of the firing, along with the firing itself, suggests some worry on Trump’s part that the economy may not be as strong as it seems. Readings of the data last week suggested employers worried about the uncertainties of the tariffs might be holding off on their hiring.
“The economy is slowing and growing below its short-run potential,” wrote Ryan Sweet, chief U.S. economist at Oxford Economics, in an analysis this week.
“As large businesses can weather tariffs better, they outperform small ones, reinforcing recent labor market weakness. Employment among small businesses, the backbone of the labor market, has barely budged and fundamentals remain unfavorable.”
But Trump on Thursday said the numbers were wrong, intentionally or not, and he and his supporters said those skeptical of the tariffs were also off base.
“What we’re seeing is the manufacturers overseas are absorbing some of that. Retailers are absorbing some of that. And part of our plan is to have real income growth for working-class Americans,” Bessent said on MSNBC’s “Morning Joe” on Thursday.
There is no doubt that Trump is delivering on his promise to impose steep tariffs and change America’s policies.
As of Thursday morning, the average tariff rate will be around 15 percent, compared with the roughly 2 percent rate in 2024.
Trump’s patchwork of tariff orders and trade pacts marks an unequivocal political victory for the president. He transformed the Republican Party — for decades a bastion of free traders — into a political force for protectionism governing the world’s biggest economy.
How long that victory can last is an open question, as U.S. trading partners and businesses scramble to understand what they must do to comply with Trump’s ever-changing tariff rates and his expectations for foreign investment.
Economists say the net impact of Trump’s tariffs and tax cuts will be lower incomes for the poorest Americans and higher costs for most businesses.
“Small businesses are under pressure from a weakening in sales, elevated input costs, and high interest rates,” Sweet said in his analysis.
“Tariffs are widening the gap between small and large businesses, as larger firms have the financial wherewithal to front-load imports and have more pricing power. Small businesses have less muscle to renegotiate contracts with foreign manufacturers, and it’s more difficult to pass tariffs onto the consumer,” Sweet wrote.
Trump had first announced the plan for the tariffs on April 2 but imposed a 90-day extension a week later, amid pressure from Wall Street and fellow Republicans to calm the ailing markets. The early July tariff deadline for the 90-day extension to expire was then extended to Aug. 1 and pushed to Thursday.
Trump’s tariff order stated that all imports face a 10 percent tariff. Some trading partners face higher rates, including 41 percent on Syria, 19 percent on Indonesia and Thailand, and 15 percent on South Korea, Japan and the European Union.
Some countries, such as Laos and Switzerland, at 40 and 39 percent, respectively, face even higher tariffs, while others including Nicaragua face an 18 percent tariff.
One lobbyist with expertise in the restaurant industry said many employers believe the regime will change again if there are more signs it is weakening the economy.
“Most business leaders are facing two realities at the same time,” the lobbyist said. “On one hand, they need to plan for increased costs — from tariffs and high interest rates, cost of goods for construction, equipment and the like — while also recognizing that as the administration continues to try to position these issues as a win politically, they are likely to change and uncertainty is just baked into the calculus at this stage.”
A lobbyist with experience in the retail sector said businesses have largely come to accept that Trump’s second administration will mean uncertainty for them and have learned how to navigate that.
“I think the turbulence has settled in, and folks have come to terms with four fiscal years of not being able to predict the twists and turns of the tariff world,” the second lobbyist said. “There are many theories about how this will affect prices and the economy, but more and more people are settling in to navigate as best they can and hoping for the best.”
Some trading partners will face high tariffs because of a specific issue cited by Trump. He will hit Brazil with a 50 percent tariff, in part citing the country’s prosecution of former President Jair Bolsonaro over his efforts to remain in power after losing an election, and he will hit Canada with a 35 percent tariff, citing frustrations with the flow of fentanyl across the U.S. border.
Certain exemptions exist, such as for goods already on a cargo ship and heading to the U.S. Goods that are covered by the U.S.-Mexico-Canada Agreement signed in 2020 will also be exempt from tariffs on Canada and Mexico.
Friday marks Trump’s deadline for Russia to agree to a ceasefire with Ukraine or face “severe” tariffs, and he threatened to slap a 100 percent “secondary” tariff on countries that do business with the Kremlin, including those that purchase Russian oil and gas, such as India.
Additionally, trade talks with China are ongoing, and Trump officials discussed extending the Aug. 12 deadline for a 30 percent tariff on Chinese goods. Trump would still need to agree to an extension, and it’s unclear how long it would last.
Trump has also threatened industry-specific tariffs, such as those on automobiles, copper, steel, and aluminum, along with tariffs of up to 250 percent on pharmaceutical imports. He most recently warned that he plans to impose a 100 percent tariff on all semiconductor imports.
Trump’s semiconductor move is part of his goal to bring electronics supply chains to the U.S., and various major companies have pledged to invest in domestic manufacturing. Such a move could have national security implications, like making the U.S. less reliant on Taiwanese-made chips.
Trump administration officials broadly have argued that a major trade reset was necessary, and that Trump’s vision for tariffs will bring jobs and growth to the U.S. and eliminate reliance on foreign-made goods.
“We are trying to rebalance trade in America’s favor. You know, President Trump has said, and I’ve said we want to bring back the high-precision manufacturing jobs,” Bessent told MSNBC’s “Morning Joe.”
“We want to get rid of these big deficits that we have with countries that have created these big surpluses and gutted our manufacturing base and have been terrible for American workers.”
Source: The Hill