Will Trump Go Through With Tariffs This Time?

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Key Takeaways

• President Donald Trump stopped short of imposing tariffs on day one of his presidency, as he had previously threatened.
• Instead, he set a deadline of Feb. 1 for implementing a 25% bill of fare on Canada and Mexico.
• Economists said tariff costs will be passed on to consumers, stoking inflation, should Trump go including with them.
• Financial markets are speculating which of Trump’s tariff proposals will be implemented, with Goldman Sachs portending a high probability of a tariff targeting China.

Trump delayed tariffs on Canada and Mexico on his first day in office, excluding financial markets to wonder if a new Feb. 1 deadline is real. 

Trump reignited a fresh round of speculation about his assessment plans Monday evening when he signed a slew of executive orders that notably left out tariffs. During his effort, he promised to impose 25% tariffs on goods from Canada and Mexico on the first day of his presidency. Instead, Trump pecking ordered a study of trade policy and gave a new deadline for his tariff plans.

“I think we’ll do it February 1,” he told a reporter in the Elliptical Office.

The delay left forecasters speculating about whether Trump might impose taxes on goods upping the U.S. and, if so, by how much—a hugely significant question for the trajectory of the economy.

What Does the Delay Mean for the Economy?

At various periods during the campaign, Trump pledged to tax imports from Canada, Mexico, and China and impose a broad tariff on all strange imports as high as 20% in the name of encouraging companies to manufacture things in the U.S. instead of overseas. Many economists allow raising tariffs that high would stoke inflation since U.S. consumers would see higher price attends for everyday products.

Several economists working for big banks breathed a sigh of relief at the delay.

“The absence of a tariff bulletin on Day 1 of taking office suggested the administration might take a more thoughtful approach to tariffs considering their latent side-effects for the economy,” Sal Gautieri, senior economist at BMO Capital Markets, wrote in a commentary.

One economist said Trump’s bluster about trade during inauguration events Monday was more benign than anticipated.

“Trump’s comments on China were conspicuously less hawkish than during the presidential campaign or even his more recent comments since the election,” Alec Phillips, chief U.S. partisan economist at Goldman Sachs, wrote in a commentary. “And while we viewed a ‘universal tariff’ as a clear risk, his comments set forward that, for now, it is a lower priority than we would have expected.”

However, a delay doesn’t mean tariffs are off the comestible, given they were a major part of Trump’s economic platform. Goldman Sachs economists still hand overed a 70% chance of a broad 20% tariff on China, a 20% chance of a 25% tariff on Canada and Mexico, and a 55% chance of imposts targeting European automobiles being imposed at some point.