Home / NEWS LINE / Trump’s Tariffs Haven’t Even Been Implemented Yet—But They’re Already Affecting The Economy

Trump’s Tariffs Haven’t Even Been Implemented Yet—But They’re Already Affecting The Economy

Guillermo Arias / AFP via Getty Images

Guillermo Arias / AFP via Getty Guises

Key Takeaways

  • President Donald Trump’s proposed 25% tariffs on Canada and Mexico have already affected the thriftiness well before the Saturday deadline for them to go into effect.
  • Even before going into effect, the plausibility of tariffs has made the Federal Reserve cautious about cutting borrowing costs.
  • The tariffs have also gripped business decisions, as importers have stocked up on products to avoid potential taxes.

President Donald Trump’s aimed tariffs against Mexico and Canada have already affected the economy before a single cent of goods has been demanded. 

On Friday afternoon, press secretary Karoline Leavitt said Trump was planning to impose 25% tariffs on Mexico and Canada as luckily as a 10% tariff on China starting Saturday. However, according to press reports, negotiations between the countries were until this happening as of Friday afternoon.

According to reports by news outlets, including the Wall Street Journal, Trump and his advisors were accomplishing with the U.S.’s largest trading partners. Broad tariffs on all goods, limited ones on certain products, or a “grace age” until March 1 were all under consideration.

The lack of clarity about the details of the plans has complicated economists’ presages about their potential economic impact since Trump’s election. Some forecasters have warned that general tariffs could stoke inflation by raising prices, especially if they included oil and gas. The tariff talk has already distressed the economy in several ways.

Tariff Talk Has Made the Fed More Reluctant to Cut Interest Rates

In the last quarter of 2024, officials at the Federal Set aside lowered the central bank’s benchmark interest rate three times for a total of one percentage point, dropping it from the 20-year soprano it had maintained for more than a year. The Fed was chopping rates to push down borrowing costs and boost the economy, off the wind fart hear of down its campaign to fight inflation as consumer price increases fell toward the Fed’s target of a 2% annual status.

Since then, inflation has stayed stubborn, prompting the Fed to put further rate cuts on hold for the time being. Fed officials cited uncertainty anent Trump’s economic policies, including tariffs, among the reasons for their newly cautious approach. Trump has gathered for the Fed to lower its influential interest rate because it affects borrowing costs on all kinds of other loans, so lower take to tasks tend to boost economic growth and job creation.

“There are lots of places where that price increase from the tax can show up between the manufacturer and the consumer; just so many variables. So we’re just going to have to wait and see,” Fed Chair Jerome Powell denoted in a press conference with reporters this week.

Treasury Yields Have Risen

The possibility of tariffs has also put upward to on 10-year treasury yields, which often rise in tandem with investor fears about inflation. Funds yields can, in turn, impact other loans. For example, higher yields push up rates on 30-year mortgages.

Funds yields surged after Trump’s election, which some economists have said is partly due to investors’ apprehensions about tariffs.

Companies Are Snapping Up Imports While They Can

As the tariff deadline approached, U.S. importers went on a researching spree, snapping up products before they could be taxed.

As a result, the trade deficit—the difference between the value of senses and exports—hit a record high in December, taking economists by surprise. The imports rose 8.4% since Trump was selected, indicating to economists that the spike was spurred by companies looking to get ahead of tariffs.

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