It seems the consequences of Trump’s actions have, once again, bit him in the rear as he issues a partial and temporary lifting of tariffs.
Here we (sort of) go again. Once again, Trump slapped Canada, Mexico, and China with punishing tariffs. On the eve of the tariffs being put in place, Trump made it clear there was nothing Canada could do to reverse them and that he was in it for the long haul on this one. Some of the messaging Trump had was that there would be short term pain, but it would be very brief. Even the Treasury Secretary, Scott Bessent, suggested that despite the inflationary tariffs, inflation was going to fall anyway which was pretty facepalm worthy in and of itself.
At any rate, the Canadian government, along with the provincial governments, did what I think is the correct move in this case: vow to hit back. Hitting back against the bully in chief is the only logical move that I can think of in this scenario. This, in part, because it is ultimately what worked last time when Trump was initially trying to hit Canada with the 25% tariffs.
Either way, Trump then went ahead with the tariffs, seemingly psyching himself up to believe that there will be a slight dip in the markets, but it will all work itself out and Trump will have finally gotten away with these tariffs this time around.
It didn’t.
What ensued was a 1,300 point stock market crash on the DOW Jones. It quickly became apparent that this wasn’t the temporary small amount of pain he envisioned. This over top of all the layoffs that were coming down the pipeline in various sectors on top of it all. After probably watching the chaos unfold after watching Fox News, Trump, yesterday, issued a 30 day reprieve on the auto sector. From Global News:
U.S. President Donald Trump is giving the Big Three automakers a one-month exemption from sweeping tariffs he imposed on Canada and Mexico, the White House confirmed Wednesday.
The exemption came after Trump held a call earlier Wednesday with representatives of Stellantis, Ford and General Motors at the request of the companies, which rely on North American production lines enshrined in the United States-Mexico-Canada Agreement (USMCA).
“We are going to give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, reading from a statement she attributed to Trump.
“Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA the president is giving them an exemption for one month so they are not at an economic disadvantage.”
When the news came down, the markets bumped back up in a partial recovery, yet the markets were still down overall for the week by quite a bit. So, in response to the mess he created, Trump decided to lift a bunch of other things. This seemingly in an effort to figure out by trial and error which stuff he can tariff without a crash in the markets and which he can’t. From NBC News:
President Donald Trump on Thursday issued exemptions on tariffs for a wide range of goods coming into the U.S. from Mexico and Canada, two days after putting in place sweeping 25% tariffs that rattled stock markets, as businesses warned the move would increase prices for consumers.
The exemption would apply to goods compliant with the North American free trade agreement reached during Trump’s first term and will last until April 2, when Trump plans another round of retaliatory tariffs on goods from a range of countries.
About half of goods coming into the U.S. from Mexico would fall under the exemption and around 38% of goods from Canada would qualify, said a senior administration official. That includes potash, which is used in fertilizers.
But some Canadian energy products won’t qualify and will be subjected to a 10% tariff. And all other goods, including computers from Mexico, will be subjected to the 25% tariff, the senior administration official said.
You can almost see some of the bad thinking going on here. By pulling back a huge swath of tariffs, Trump is seemingly trying to figure out which tariffs the markets won’t care about and which ones that will send the markets tumbling down. If the markets largely recover by making this action, then the goods and services that the tariffs didn’t apply to are fine and he can move on to which goods and services he can tariff next in next months round of tariffs as he figures out which are economic bombs he has to avoid as he narrows in on which tariffs should move forward with and which ones he shouldn’t.
The thinking, of course, is extremely stupid because the Trump administration can very easily look at the data and determine how things are economically integrated. His office has access to all of that data, so there wouldn’t even be a reason to trial and error the entire North American economy. In fact, there are plenty of people out there who can easily explain how this whole economics thing works out and why tariffs on various goods and services is a bad idea. As a general rule, tariffs on anything is a bad idea, but Trump has too much ego to listen to people who have a real grasp on how things work in the real world.
At any rate, the messaging from Canada’s side, thus far, seems to be that they have no interest in playing these games. For multiple premiers such as the BC premier and Ontario premier, the counter tariffs are going full steam ahead anyway. The Federal government, last we heard, was also moving ahead with these counter tariffs, though going to look at the latest executive orders to further determine what additional actions are needed. The logic being that as long as there is even the threat of tariffs, then Canada isn’t budging on their side of things. As it stands now, this latest lifting doesn’t actually lift all of the tariffs. What’s more, there is that threat of tariffs further down the line including early next month which is when these tariffs are now set to take hold again.
My hope is that the Canadian and provincial governments will look at the partial pull back and respond by basically saying, “not good enough” and either keep moving ahead with the counter tariffs or maintain the counter tariffs that have already been imposed. Unless something has changed while I have been writing this article or something changes shortly after this is published, that’s seemingly where things stand for the time being. As long as Trump continues to play these games of threatening other nations like Canada, this problem won’t be going away. Canada needs a permanent solution to this, not a temporary capitulation or partial meeting of the middle.
Either way, the DOW Jones dropped another 427 points today which is likely going to bring with it additional pressure on Trump. After all, Trump is seemingly daft enough to believe that the stock markets and the economy are one in the same. As long as US stock markets keep sliding, and Fox News reports on the sliding markets, Trump will continue to be under pressure to back off this ridiculous trade war.
