It took nine months to rescue two astronauts stuck on the International Space Station this weekend, yet somehow President Trump is expected to rewrite global trade rules between the U.S. and 166 World Trade Organization-member countries in less than two months.
Amid signs of investor unease, the Trump administration’s “discordant chorus” on tariffs is failing to reassure Main Street or Wall Street, according to The Washington Post. The article called Trump’s economic policies “erratic” and said they were “leaving Americans more downbeat than they have been in years.”
The Post might have been referencing the Conference Board’s monthly Consumer Confidence Index. This is the most common index sourced by the press. The Expectations Index fell below 80 to 72.9 in February, which is often an indicator of pending recession. The overall index fell below the baseline level of 100 to 98.3. By comparison, it was 91.3 in Biden’s first month in office back in 2021.
A new NBC News poll found that44% of registered voters believe the U.S. was going in the right direction, still short of a majority but notably higher than the mere 15% recorded in Biden’s first month in office.
This is all short-term noise.
Over the weekend, Treasury Secretary Scott Bessent told ABC News that he was not worried about the 10% correction in the S&P 500. Trump is the Disruptor-in-Chief. America is a disruptor economy, after all. Investors should be used to disruptions and surely accustomed to 10% market declines over week-long periods.
Bessent said the U.S. economy post-pandemic was too reliant on government spending. It needed a detoxification period.
Washington has been cooking the books of the U.S. economy, but those chefs have now left the kitchen. Bank of America’s Research Investment Committee Report, aka The RIC Report, said this month that 85% of new jobs created in 2024 were government jobs and that 33% of all spending in the economy came from Washington. “The U.S. had never been more government dependent for growth. The U.S. detox of efficiency, deregulation and trade may mean more market pain before visible GDP gains.”
Tariffs, particularly those on steel and aluminum imports from Mexico and Canada, will be blamed for economic uncertainty—as if the stock market were suddenly dominated by companies uniquely vulnerable to higher metal prices.The Washington Post noted that stocks rose by more than 50% in four years under President Joe Biden, but the increase did Democrats little good in the 2024 election. Moreover, untold millions of Federal pandemic funds from the American Rescue Plan Act (ARPA) found their way into the stock market, artificially inflating stock prices. (Oklahoma can’t possibly be the only state that threw some ARPA money into the Nasdaq.)
“The stock market is an absolutely horrible indicator of the health of the working class. There’s very clearly a disconnect between Wall Street and the working-class economy,” Nick Iacovella, CPA’s executive vice president, told the Post.
The falling stock indexes are blamed on the different messaging on tariffs coming from the Trump administration.
“It is a bit of a muddle right now, what they mean (about the use of tariffs). Each of the economic spokespeople speaks in different ways. And I’m not even saying they’re speaking in different ways about the same thing. They’re just speaking about different things,” economist Glenn Hubbard, President George W. Bush’s top economic adviser, was quoted saying in the Post. He called the tariff messaging “unsettling.”
Why Tariffs? How Will They Be Used?
There are a number of reasons for the tariffs being outlined by the Trump administration. They are part of a bigger strategy to industrialize the U.S., a strategy that the previous government followed. Although the Biden administration did not threaten tariffs on free trade partners or the Europeans, it negotiated import limits on steel, expanded the Section 301 tariffs on China, and spent billions via enacted legislation to entice companies to manufacture EV batteries, solar and semiconductors in the U.S.
Tariffs will be used to exact concessions from a country. We saw this with Colombia and, in some degree, with Mexico and Canada. Mexico, which was told to stand-down on the border insurgency from 2021-2024, is now working with the U.S. on border security. It also seems to be going after cartel members, with 29 of them extradited to the U.S. last month. The Section 232 steel and aluminum tariffs were initially imposed in 2018, but Mexico and Canada (and many others) were granted an exemption. That exemption no longer stands, at least for now.
Another element of the tariff strategy aims to balance trade deficits with major trading partners, a concept now referred to as “reciprocal trade.” Currently, the U.S. has among the lowest tariff rates globally. Trump seeks to move on par with other countries and include things like value added taxes and non-tariff barriers. We will know more about this on April 1.
Lastly, Trump has talked about using tariffs to raise revenue for the government instead of relying so heavily on income taxes. The U.S. government needs revenue, especially if it wants to make the Tax Cuts and Jobs Act permanent. This would not be a protective tariff, but could be a lower tariff, around 10% is the number we use at CPA, which would bring in around $300 billion in revenue.
When the Trump team talks about other economic matters, like taxes, government spending, or reducing its defense footprint in Europe, it is all centered on lowering costs. Lower costs will lower the fiscal deficit. The U.S. has a record $1.147 trillion federal budget deficit. The only way that deficit is reduced is by reducing the federal government, reducing defense spending, or raising taxes to pay the government. Raising taxes will send companies packing to low tax nations, reducing potential tax revenue in the U.S. and outsourcing blue collar labor. The corporate tax rate was 35% from 1993 until it was cut in 2018 to 21%. Between high taxes, the first years of NAFTA, and China joining the WTO, the U.S. lost millions of its industrial labor force.
The Post, like most newsrooms, have been worried about Trump’s accomplishments since day nine in office.
CPA members would be wise not to get too worried about articles like these. The main concern going forward is how the Trump administration succumbs to these pressures. Does he relent on protecting U.S. producers in favor of reduced non-tariff barriers (like killing Europe’s Digital Services Act), or dairy exports? We don’t know. It’s possible.
Trump often bragged about the stock market in his first term. Opponents of tariffs will look to dull their use by blaming the stock market’s decline on Trump’s trade policies.
From March 2018 to March 2019, the first year of China tariffs, the S&P 500 and the Dow rose by 4.7% and 5.7%, respectively.
From the Washington Post:
Some business leaders hope to redirect Trump from attacking Canada and Mexico to a more narrow focus on combating China’s trade practices. Foreign companies already see their presence in China as under threat, given President Xi Jinping’s effort to boost his country’s self-reliance. So they are prepared to see Trump erect further trade barriers on Chinese goods if they can salvage their manufacturing footprint closer to the United States.
Companies should prepare for tariffs. The political risk is too obvious to ignore, even if coping with tariff costs will be easier on some, harder on others. Automotive, for instance, is tightly enmeshed in the Mexico and Canada supply chain. A solely U.S. domestic auto industry no longer exists—it’s now effectively a USMCA-integrated industry.
Still, Trump has warned about tariffs for years. He isn’t called “The Tariff Man” for nothing. The goal is to move big corporations in the direction of sourcing more goods domestically. Lower taxes and regulations might also entice them to stick around.
Economies grow rich when they have an industry that makes things. That’s how China went from a dollar-a-day Happy Meal toy making economy, to an indispensable nation with bullet trains, AI and social media giants, and leaders across all segments of green tech and robotics.
The main economic administrators in the executive branch – like Bessent — are only speaking differently about trade because they are focused on their particular target – raising revenue, or reducing costs, for instance. The final message is the same.
Commerce Secretary Howard Lutnick told CBS News recently that the America First Trade Agenda was “the most important thing America has ever had.” He said that the agenda was worth implementing, even if it produced an early recession.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Why Overhauling Global Trade Rules Is a Long-Term Challenge, Not a Two-Month Fix
It took nine months to rescue two astronauts stuck on the International Space Station this weekend, yet somehow President Trump is expected to rewrite global trade rules between the U.S. and 166 World Trade Organization-member countries in less than two months.
Amid signs of investor unease, the Trump administration’s “discordant chorus” on tariffs is failing to reassure Main Street or Wall Street, according to The Washington Post. The article called Trump’s economic policies “erratic” and said they were “leaving Americans more downbeat than they have been in years.”
The Post might have been referencing the Conference Board’s monthly Consumer Confidence Index. This is the most common index sourced by the press. The Expectations Index fell below 80 to 72.9 in February, which is often an indicator of pending recession. The overall index fell below the baseline level of 100 to 98.3. By comparison, it was 91.3 in Biden’s first month in office back in 2021.
A new NBC News poll found that 44% of registered voters believe the U.S. was going in the right direction, still short of a majority but notably higher than the mere 15% recorded in Biden’s first month in office.
This is all short-term noise.
Over the weekend, Treasury Secretary Scott Bessent told ABC News that he was not worried about the 10% correction in the S&P 500. Trump is the Disruptor-in-Chief. America is a disruptor economy, after all. Investors should be used to disruptions and surely accustomed to 10% market declines over week-long periods.
Bessent said the U.S. economy post-pandemic was too reliant on government spending. It needed a detoxification period.
Tariffs, particularly those on steel and aluminum imports from Mexico and Canada, will be blamed for economic uncertainty—as if the stock market were suddenly dominated by companies uniquely vulnerable to higher metal prices.The Washington Post noted that stocks rose by more than 50% in four years under President Joe Biden, but the increase did Democrats little good in the 2024 election. Moreover, untold millions of Federal pandemic funds from the American Rescue Plan Act (ARPA) found their way into the stock market, artificially inflating stock prices. (Oklahoma can’t possibly be the only state that threw some ARPA money into the Nasdaq.)
“The stock market is an absolutely horrible indicator of the health of the working class. There’s very clearly a disconnect between Wall Street and the working-class economy,” Nick Iacovella, CPA’s executive vice president, told the Post.
The falling stock indexes are blamed on the different messaging on tariffs coming from the Trump administration.
“It is a bit of a muddle right now, what they mean (about the use of tariffs). Each of the economic spokespeople speaks in different ways. And I’m not even saying they’re speaking in different ways about the same thing. They’re just speaking about different things,” economist Glenn Hubbard, President George W. Bush’s top economic adviser, was quoted saying in the Post. He called the tariff messaging “unsettling.”
Why Tariffs? How Will They Be Used?
There are a number of reasons for the tariffs being outlined by the Trump administration. They are part of a bigger strategy to industrialize the U.S., a strategy that the previous government followed. Although the Biden administration did not threaten tariffs on free trade partners or the Europeans, it negotiated import limits on steel, expanded the Section 301 tariffs on China, and spent billions via enacted legislation to entice companies to manufacture EV batteries, solar and semiconductors in the U.S.
Tariffs will be used to exact concessions from a country. We saw this with Colombia and, in some degree, with Mexico and Canada. Mexico, which was told to stand-down on the border insurgency from 2021-2024, is now working with the U.S. on border security. It also seems to be going after cartel members, with 29 of them extradited to the U.S. last month. The Section 232 steel and aluminum tariffs were initially imposed in 2018, but Mexico and Canada (and many others) were granted an exemption. That exemption no longer stands, at least for now.
Another element of the tariff strategy aims to balance trade deficits with major trading partners, a concept now referred to as “reciprocal trade.” Currently, the U.S. has among the lowest tariff rates globally. Trump seeks to move on par with other countries and include things like value added taxes and non-tariff barriers. We will know more about this on April 1.
Lastly, Trump has talked about using tariffs to raise revenue for the government instead of relying so heavily on income taxes. The U.S. government needs revenue, especially if it wants to make the Tax Cuts and Jobs Act permanent. This would not be a protective tariff, but could be a lower tariff, around 10% is the number we use at CPA, which would bring in around $300 billion in revenue.
When the Trump team talks about other economic matters, like taxes, government spending, or reducing its defense footprint in Europe, it is all centered on lowering costs. Lower costs will lower the fiscal deficit. The U.S. has a record $1.147 trillion federal budget deficit. The only way that deficit is reduced is by reducing the federal government, reducing defense spending, or raising taxes to pay the government. Raising taxes will send companies packing to low tax nations, reducing potential tax revenue in the U.S. and outsourcing blue collar labor. The corporate tax rate was 35% from 1993 until it was cut in 2018 to 21%. Between high taxes, the first years of NAFTA, and China joining the WTO, the U.S. lost millions of its industrial labor force.
The Post, like most newsrooms, have been worried about Trump’s accomplishments since day nine in office.
CPA members would be wise not to get too worried about articles like these. The main concern going forward is how the Trump administration succumbs to these pressures. Does he relent on protecting U.S. producers in favor of reduced non-tariff barriers (like killing Europe’s Digital Services Act), or dairy exports? We don’t know. It’s possible.
Trump often bragged about the stock market in his first term. Opponents of tariffs will look to dull their use by blaming the stock market’s decline on Trump’s trade policies.
From March 2018 to March 2019, the first year of China tariffs, the S&P 500 and the Dow rose by 4.7% and 5.7%, respectively.
From the Washington Post:
Some business leaders hope to redirect Trump from attacking Canada and Mexico to a more narrow focus on combating China’s trade practices. Foreign companies already see their presence in China as under threat, given President Xi Jinping’s effort to boost his country’s self-reliance. So they are prepared to see Trump erect further trade barriers on Chinese goods if they can salvage their manufacturing footprint closer to the United States.
Companies should prepare for tariffs. The political risk is too obvious to ignore, even if coping with tariff costs will be easier on some, harder on others. Automotive, for instance, is tightly enmeshed in the Mexico and Canada supply chain. A solely U.S. domestic auto industry no longer exists—it’s now effectively a USMCA-integrated industry.
Still, Trump has warned about tariffs for years. He isn’t called “The Tariff Man” for nothing. The goal is to move big corporations in the direction of sourcing more goods domestically. Lower taxes and regulations might also entice them to stick around.
Economies grow rich when they have an industry that makes things. That’s how China went from a dollar-a-day Happy Meal toy making economy, to an indispensable nation with bullet trains, AI and social media giants, and leaders across all segments of green tech and robotics.
The main economic administrators in the executive branch – like Bessent — are only speaking differently about trade because they are focused on their particular target – raising revenue, or reducing costs, for instance. The final message is the same.
Commerce Secretary Howard Lutnick told CBS News recently that the America First Trade Agenda was “the most important thing America has ever had.” He said that the agenda was worth implementing, even if it produced an early recession.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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