Tariffs are as the Unites States itself. The first U.S. tariff was signed into law in 1789. It had two purposes. One was to provide funding for the federal government. Back then, about 95% of the funding came from tariffs. The other purpose was to protect American industry from foreign competition.
In the early 1900’s, with the adoption of the income tax, one of the reasons for levying tariffs was eliminated. The income tax replaced tariffs as a major source of revenue for the federal government, but the goal of protecting American industry from foreign competition has remained throughout.
The new higher tariffs were scheduled to go into effect on Tuesday, January 4. Most countries involved had expressed their opposition and threatened to retaliate with tariff against the United States. Also, early Monday, January 3 all three major stock indices registered early losses of around -2%.
Then, as Monday progressed, we witnessed a substantial improvement. Conversations with Mexico’s president Sheinbaum and Canada’s prime minister Trudeau resulted in border security concessions by both counties, thereby causing a 30-day postponement of the tariffs on both countries. It is not clear whether China received a similar postponement, but the Chinese have been calling for negotiations regarding their overall trade posture with the United States, and that seems likely to go forward.
By late Monday, all three major stock indices had still registered losses, but they had rebounded from their earlier losses. They ended the day as follows: DJIA -0.28%, S&P500 -0.76, and Nasdaq -1.20%.
If Trump’s tariff policies do eventually go into effect as announced, it is almost certain that they will lead to increased inflation. Considering that inflation was one of the major problems with the Biden administration, and a major topic of Trump’s campaign, it is unlikely that he would want that to happen.
It is possible that these threats of tariffs are designed to put Trump in a good negotiating position to obtain concessions in trade, border security, and other areas. If that is the case, they seem to be working.
It’s disingenuous to talk about inflation from tariffs as if it is an economics class and ignore that it’s a negotiation. In fact it’s counterproductive, which is why RINOs and people with Trump Derangement Syndrome do it, all the while pretending to be conservative of Republican.
That the word FENTANYL appears nowhere in your article shows you should be fired.