And yet there’s a reason CEOs, bankers, investors and even Trump advisers have largely shrugged off warnings about the damage a 10%-to-20% universal tariff and even higher import duties on China would do, or the resurgence in US inflation they might bring.
From the incoming president’s own track record, many see evidence Trump is unlikely to deliver on all he has threatened, and express confidence they can adapt to whatever he delivers this time around.
Even as economists decried his plans as a terrible miscalculation, Trump ratcheted up protectionist threats on the campaign trail because they were a key part of an agenda popular with voters. After his win, he claimed a license to deliver on those promises.
Trump also built a reputation as a transactional president, who was open to lobbying from CEOs like Apple Inc.’s (AAPL) Tim Cook on tariffs and flattery from foreign counterparts who learned trade threats could be defused with a promise to buy more Iowa soybeans, or even a peck on the cheek.
Massive new tariffs just campaign fodder? The president-elect can be played? Or the president elect won’t have congressional support for much of his tariff agenda?
Section 232 of the Trade Expansion Act of 1962 allows any President in office to impose tariffs without Congressional approval. Happened in 2018 (steel tariffs).
I can see how they will adopt. Audi would drop the EU built Q3, push Q3 prospects into a Mexican built Q5, and take more money off them. Chevy can drop the Korean Trax and Trailblazer, push prospects into a Mexican built Equinox, and take more money off them. Subaru can drop the Japanese built Impreza and Forester, push Impreza prospects into a US built Crosstrek, and Forester prospects into a US built Ascent, and take more money off them. And, if customers cry about the price, they blame the government.
Piece on the evening news tonight, talking about the big tariffs that have been promised. The reporter was talking with a small appliance retailer, who is busy filling up his warehouse with inventory, before the tariffs take effect. As an example, the retailer pointed to a Chinese made air fryer: $130 now, would be $200 with the tariff. And, no, neither the maker in China, nor the Chinese government, will be paying the tariff. The tariff will come up as a line item on his invoice, and he can’t afford to do anything other than pass that cost on to consumers.
As with anyone else, with something to sell, the retailer urged viewers to buy now, to duck the tariff.
Must be more of that “fake news” we hear so much about.
Examining my own vulnerabilities: washer, dryer, and fridge are 15+ years old. Furnace, central a/c, dish washer are all newish. I have a considerable inventory of spare TVs, and DVD players, from Goodwill and Salvation Army, purchased for peanuts. Two spare computers, three spare monitors. Biggest vulnerability is my nearly 11 year old car. I would like to keep it another 4 or 5 years. If I bought a new car prematurely, to duck the tariff fueled price increases, I would lose more in depreciation, than the tariff would cost me 5 years from now.
Recall, the following guy did not immediately cancel all of TFG’s tariffs. The washing machine tariff expired on schedule, in February 2023. Recall TFG pointing that out, with words to the effect “if tariffs are so bad, why didn’t he repeal them immediately?” good point.