President Donald Trump described the U.S. as a patient recovering from a successful surgery. It did nothing to dissuade businesses, markets and millions of Americans from their belief the country is bleeding out on the table.
Americans watched in horror as their 401(k)s plunged Thursday morning after the markets opened, with the Dow dropping 1,300 points and the S&P 500 losing 3.7 percent as of noon. Stellantis announced it is laying off 900 U.S. workers at five domestic facilities as it pauses manufacturing at two plants in Canada and Mexico. And defense and energy industry officials voiced private fears that the tariffs would take too long to jump-start domestic manufacturing of core components needed for their operations currently produced abroad.
While Republicans have spent the last two months acquiescing to the president on a long list of issues, Sen. Chuck Grassley (R-Iowa) fired the GOP’s first serious shot across the bow at the administration on tariffs. Grassley and Sen. Maria Cantwell (D-Wa.) introduced legislation Thursday morning to “reaffirm Congress’ key role in setting and approving U.S. trade policy.”
And many Republicans were left offering lukewarm defenses of Trump’s new tariffs.
"I hope he is right. I hope the naysayers are wrong,” said Sen. Ron Johnson, (R-Wisc.). “I don't know.”
Sen. Rand Paul (R-Ky.), one of the Senate’s most vocal opponents of tariffs, called the stock market drops “a huge loss.”
“That's not just me saying tariffs don't work. That's millions and millions of people buying and selling stocks that are very, very concerned that tariffs are going to cause the economy to go in the wrong direction,” Paul said.
But the White House isn’t flinching at the backlash — instead repeating its mantra that the trade barriers will help the U.S. economy in the long run. In addition to Trump’s triumphant post on Truth Social, top administration officials, including Vice President JD Vance, Commerce Secretary Howard Lutnick and White House press secretary Karoline Leavitt, made the rounds on television Thursday morning before the markets opened to assure the American people that everything is fine — and to trust the president.
“What I’d ask folks to appreciate here is that we’re not going to fix things overnight,” Vance said in an early appearance on Fox & Friends. “We are fighting as quickly as we can to fix what was left to us, but it’s not going to happen immediately.”
But there was one clear point of divergence in the White House’s message — whether the president is receptive to dealmaking with its trading partners — as administration officials, members of Congress and even the president’s own son offered conflicting views. A White House official, during a call previewing the tariffs on Wednesday, insisted that the policy was “not a negotiation, it’s a national emergency” — a point Lutnick underscored during a Thursday interview with CNN.
“I don’t think there’s any chance … that President Trump is going to back off his tariffs,” Lutnick said. “This is the reordering of global trade.”
But Eric Trump, in a post on X, suggested his father was open to negotiations and encouraged countries to run to the table.
“I wouldn’t want to be the last country that tries to negotiate a trade deal with [the president],” he wrote. “The first to negotiate will win — the last will absolutely lose. I have seen this movie my entire life.”
While the Trump administration has acknowledged that it expects the tariffs to result in some short-term pain for consumers in the form of higher prices, it has not said how long they expect it to last. Agriculture Secretary Brooke Rollins, speaking to reporters outside the White House, said that there "will be a short time of uncertainty, and then we'll move back to the prosperity that this president has envisioned,” without offering a time frame.
Economists and industry leaders have been dubious of that gamble, warning that a recession and higher prices are unlikely to birth a golden economic age. The White House has been pressing lobbyists not to complain about the tariffs publicly and to keep their remarks positive, according to two energy industry officials, granted anonymity to discuss private conversations.
For as much time as the administration spent preparing for the public rollout of their tariff plan, many top economists were left scratching their heads at the specifics, especially as it applies to some smaller countries and territories that barely do any trade with the U.S.
“This is basically gibberish,” said Ed Gresser, a former official in the Office of the U.S. Trade Representative now at the Progressive Policy Institute, a left-leaning think tank.
“What they’re doing is sort of saying that this is a reciprocity policy that’s based on foreign trade barriers and so forth, but actually has nothing to do with that at all,” he said.
Instead, the administration has applied a math formula using export figures and trade deficits to devise levies, he said.
“It’s really divorced from economic analysis,” he said.
Among those Trump has targeted with new tariffs: Lesotho, the tiny landlocked country that was slapped with a 50 percent tariff rate — the highest rate, shared also by the French territory of St. Pierre and Miquelon — and only has a trade imbalance with the U.S. because of a law that allows sub-Saharan African countries to ship thousands of goods duty-free; an overseas territory whose only inhabitants are workers at a military base operated jointly by U.K. and U.S. forces; and the Heard and McDonald Islands, home to no human, and mostly penguin, residents.
The tariffs could be devastating for some of those small countries. Lesotho has one of the highest rates of HIV in the world and the clothing factories the tariffs target are a key source of access to HIV medicines in the country.
“This could have really tragic implications for that country,” Gresser said.
Many of the economists also remarked how basic and perplexing the formula used by the White House to calculate its reciprocal tariff rates was — and not at all correlated to the tariff rates or non-tariff barriers imposed by other countries. Despite efforts by White House officials to explain it with Greek letters that made it seem technically sophisticated, economists on Twitter quickly pointed out that the rate is still just a country’s trade deficit divided by its imports.
“The vibe on Wall Street right now is a bit of chaos,” said a senior strategist on Wall Street granted anonymity to speak candidly about the collective reaction. “This was a botched and child-like formula used to enforce something with massive implications.”
The person added that while Wall Street views Trump’s goals of boosting domestic production and holding its trading partners more accountable positively, they’re nervous about the methods and speed with which he’s going about it.
A handful of countries, including Vietnam, Israel and India, have already made trade concessions in an attempt to stave off the new levies. Vietnam, for instance, announced Tuesday that it would reduce tariffs on a long list of goods, including cars, wood, ethanol, frozen chicken legs, pistachios, almonds, fresh apples, cherries and raisins — but the U.S. slapped them with a 46 percent reciprocal tariff anyway.
The tariffs on Israel — which come amid the country’s ongoing war in Gaza — are also straining relations between the two countries, which signed a free trade agreement 40 years ago. Mark Mellman, president and CEO of Democratic Majority for Israel, compared the tariffs to the Boycott, Divestment and Sanctions movement, the Palestinian-led effort to punish Israel economically, saying that Trump “made a grave error in slapping a higher tariff on Israel than on Turkey and even Iran.”
Ron Tomer, president of the Manufacturers Association of Israel, told the Jerusalem Post that if the decision stands, it is "a regression in the trade and investment relationship between the countries, especially considering the long-standing and deep, loyal friendship between the two nations."
It will likely be harder for smaller, poorer countries hit with tariffs, like Lesotho or Laos, to negotiate with the administration, according to trade experts. They do so little trade in the eyes of the U.S. that they likely fall to the back of the line when it comes to cutting deals.
Other apparent contradictions in the policy touched on the scrambled nature of U.S. security alliances.
The list of tariffed countries included Ukraine but excluded Russia and Belarus. Treasury Secretary Scott Bessent justified the two exclusions in an interview on Fox News Wednesday night by pointing to U.S. sanctions against Russia and Belarus over the war in Ukraine. But U.S. Census Bureau data show the United States imported $3 billion worth of goods from Russia last year and $20 million from Belarus.
In the defense industry, where huge prime contractors like Lockheed Martin and Boeing have been relying on predictable funding from the Trump administration and the Pentagon to kickstart a major arms buildup, executives tuning into the president’s Rose Garden left with a sinking feeling that the tariffs would lead to more disruption — and possibly accelerate the rise of new entrants into the defense industry with Silicon Valley’s backing.
“In the long run it may spur the growth of non-American defense contractors,” one defense industry official said.
Doug Palmer, Jordain Carney, Adam Cancryn, Jake Traylor and Amanda Friedman contributed to this report.
from Politics, Policy, Political News Top Stories https://ift.tt/NhUDTKs
https://ift.tt/GuTC8sI
0 Comments