Broad new tariffs renew uncertainty for business, trading partners
CEI’s senior economist Ryan Young was cited regarding new tariffs.
Trump’s latest tariffs may throw a wrench into ongoing negotiations with a wide range of trading partners, including China, the EU along with Mexico and Canada. The EU is considering a vote to lower tariffs on U.S. goods as part of a deal struck last year, while the U.S., Mexico and Canada are in negotiations over the U.S.-Mexico-Canada Agreement that is under review this year.
“Our trading partners all know what the administration’s word is worth, so whatever deals (Trump) announces, I think everyone on our side and on our trading partner sides are treating those as temporary,” said Ryan Young, senior economist at the Competitive Enterprise Institute. “With the lame duck aspect in play, a lot of our allies could just be waiting out the clock and just wait for next administration of either party to at least be predictable on trade, regardless of their policy stance.”
Tuesday’s announcement was also a fresh dose of uncertainty for businesses that have been battered by back-and-forth trade policy from the White House and a recent oil shock due to the war in Iran that has further increased their costs.
Many companies have tried to absorb the cost of Trump’s tariff agenda over the last year because of concerns that higher prices would scare off consumers whose budgets are becoming increasingly stretched by years of elevated inflation. But many companies across industries appear to be reaching their limits and have said they will have to start passing tariffs onto customers.
“If they raise the tariffs and just keep them there, it’s a hit, but they can take it, they can deal with it, they can plan around it. When you have tariff rates going up and down on a whim, and you can’t predict anything, that’s actually a lot worse,” Young said.
Adding to the uncertainty are questions about whether the latest round of tariffs will survive judicial scrutiny after courts repeatedly ruled against previous efforts to impose broad tariffs.