“What Lutnick is talking about is central planning, plain and simple. It’s also just silly. How much of America’s aluminum supply should come from Canada if not 60 percent? Is 50 percent the right amount? Is it 17.54 percent? Lutnick doesn’t know—because no one does—because that’s a question without an answer.
Clearly, however, the Trump administration wants the figure to be lower. New 25 percent tariffs on aluminum imports might accomplish that, but at significant cost to American consumers and businesses, whose only offense is buying aluminum from sources located within a country that is a close American ally and the signatory of a trade deal that the current president negotiated just five years ago.”
“Any hope of robust economic growth resulting from unleashing energy abundance, deregulating the private sector economy, or pro-growth tax policy may now be doused by the economic fallout of a pointless trade war.
It started as a murmur—a slight downward revision, nothing alarming. But within five days, the Federal Reserve Bank of Atlanta’s GDPNow forecast for the first quarter of 2025 went from mild optimism (2.3 percent growth) to outright recessionary territory (-1.5 percent). By March 3, the number had plunged to -2.8 percent, the kind of contraction that doesn’t just signal weakness but outright economic distress. Eight months of stock market gains were wiped out in less than four weeks.”
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“Global supply chains are rattled, businesses are reluctant to invest in capital, and consumers are cutting back on purchases. Tariffs—pitched as a way to bring jobs back—have instead choked growth. The administration’s bet that protectionism would insulate the economy from foreign competition is proving to be precisely the opposite: a self-inflicted wound.”
‘Trump’s tariffs are short term pain for long term pain.
Tariffs will raise the price of the dollar, making U.S. exports more expensive. Other countries retaliate, making U.S. products more expensive. Raising the costs of inputs for U.S. outputs makes American products more expensive. This all hurts exports. These tariffs aren’t an export strategy, they are a self-reliance strategy, and self-reliance means a much smaller economy.’
“instead of trying to decouple unilaterally from China, let’s do it in an organized manner together. Let’s sit together at the negotiation table, because if 300 million Americans impose tariffs, that’s one thing. But if 300 million Americans plus 500 million Europeans and some of the largest economies in the world and other democracies from Japan to Australia are warm-heartedly invited to join, then I think we will have a much better outcome that is very much to the benefit of every non-authoritarian economy, but most importantly, for the U.S.
I would strongly suggest that “America First” will only work if it’s not America alone. And there are some issues where America will need partners in order to have the ultimate leverage, and I think that leverage would be increased by joining forces.”
“The European Union hit back hard as U.S. President Donald Trump imposed 25 percent global steel and aluminum tariffs on Wednesday, announcing a two-stage retaliation covering €26 billion in EU exports that far exceeded a trade fight that blew up in his first term.
The European Commission said it would, from April 1, reimpose tariffs in response to €8 billion in U.S. tariffs — including on iconic American products such as Harley-Davidson motorcycles, bourbon and jeans. And, from mid-April, it will set further countermeasures over €18 billion in new U.S. tariffs, subject to the approval of EU member states.
“We deeply regret this measure,” European Commission President Ursula von der Leyen said in an early-morning statement.”
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“The 27-nation bloc — a common market spanning 450 million people — wants to send an unmistakable message that the EU is serious about defending its economic interests should Trump launch a full-scale trade war.”
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“The Commission left the door open to a deal with Trump, saying it “remains ready to work with the U.S. administration to find a negotiated solution” and adding that its measures “can be reversed at any time should such a solution be found.””
“It’s important for the new administration to understand that controlling inflation requires more than Federal Reserve action. It demands fiscal discipline. That means difficult choices that politicians typically avoid. Federal spending must be curtailed, particularly in entitlement programs. Tax revenues must be made stable and predictable. Most importantly, the administration must reject new spending, regardless of the apparent merits. Finally, more tax revenue through more growth—made possible by the improved tax system and deregulation—would help.
Continuing to ignore fiscal-monetary interactions and hoping inflation will mysteriously moderate risks a crisis that could dwarf any challenges we face today. Fiscal responsibility isn’t just about balancing books; it’s about maintaining the stability of the dollar and the prosperity of the American people. History tells us that the longer we wait, the more costly the eventual solution becomes.”
An immediate impact of tariffs is increased prices. Paying more means less money for other purchases and investments. Less purchases and investments means a smaller economy than there otherwise would be. A smaller economy means less wealth and jobs for most people.
“Trump and his allies believe tariffs are the key to all sorts of wondrous economic outcomes that will make America more prosperous. In his speech to Congress on Tuesday night, Trump said that tariffs “are about protecting the soul of our country,” whatever that means.
But even if you buy those arguments, it should be obvious that tariffs being implemented and then immediately withdrawn (for the second month in a row) will not produce the promised benefits.
They won’t generate revenue for the government, won’t cause businesses to alter their supply chains, and won’t stop the flow of illegal drugs. It’s the equivalent of looking at a river, declaring your intention to build a dam, and then expecting the river to become a reservoir.”
“Tariffs on Chinese goods like manufactured parts and chips “are going to make the production process more complicated and more expensive,” said economist Christopher Thornberg with Beacon Economics.
Thornberg said California companies that rely on those materials like Apple and Nvidia, which makes highly sought-after chips essential for training AI programs, will be able to absorb the costs “because of the mountain of profits they are sitting on.”
The longer the trade spat goes on, though, the more likely knock-on effects like higher consumer prices, but also bites out of the budget, become as companies absorb increased costs.”