“Donald Trump’s team cuts tariffs to 30 percent, while China slashes its levies to 10 percent. Now they have 90 days to do a deal.”
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“The de-escalation does not affect tariffs ranging up to 25 percent that Trump imposed on more than $300 billion worth of Chinese goods during his first term, leaving a wide range of goods with effective tariff rates of either 37.5 percent or 55 percent.”
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“It also does not roll back the 25 percent “sectoral” tariffs that Trump has imposed on autos, steel and aluminum, U.S. officials said. Some other tariff increases that President Joe Biden imposed, such as on electric vehicles, also are not affected.”
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“In a separate interview on CNBC, Bessent said the two sides may use the “Phase 1” trade deal that Trump negotiated during his first term as the “starting point” for negotiations. That pact called on China to buy an additional $200 billion worth of Chinese goods in 2020 and 2021, but Beijing fell well short of the goal.”
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“The remaining 30 percent tariff on Chinese goods from Trump’s second term reflects a 10 percent “reciprocal” baseline tariff that Trump imposed on all countries on April 2 and a 20 percent tariff that he imposed earlier this year to pressure China to do more to stop the flow of precursor chemicals that are used to make fentanyl.”
“As a legal matter, President Donald Trump’s trade war rests on the claim that imports to the United States constitute an “unusual and extraordinary” threat requiring urgent executive action.
That’s an absurd argument, of course. The fact that Americans choose to buy or sell goods across international borders is not an emergency—it’s not even a minor worry—and certainly should not justify a massive expansion of executive power.
But Trump is going to do whatever he wants until someone stops him. On Wednesday, the Senate had a chance to do that. Instead, Republicans voted overwhelmingly to keep the “emergency” going, and thus to keep the trade war going too.
The Senate voted 49–49 on Wednesday evening to block Sen. Rand Paul’s (R–Ky.) resolution that sought to end the emergency declaration Trump signed on April 2 to impose his so-called “Liberation Day” tariffs on nearly all imports to the United States.”
“”Trivium Packaging, a manufacturer of steel and aluminum containers…has shelved any expansion plans in the US for now, and the only hiring happening at its five US plants is to fill in staff losses due to attrition” because of the increased cost of the imported metal on which it relies, according to an April 17 Bloomberg report. Trivium was just one of the companies profiled in the article that “are putting hiring and expansion plans on hold while they come up with short-term plans to cope with the tariffs.”
Consumers are also changing their behavior in response to the trade war. Americans initially flocked to buy cars to beat anticipated price hikes. Purchases slowed as the expected price increases materialized, spurring the Trump administration this week to carve out some tariff relief for automakers.
But the same factors driving concerns about prices and availability regarding cars affect every other industry. According to the Federal Reserve’s latest Beige Book report on economic conditions, “uncertainty around international trade policy was pervasive” and “non-auto consumer spending was lower overall.”
Additionally, “several Districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions” and “there were scattered reports of firms preparing for layoffs.”
Importantly, added the Beige Book analysis, “firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers.”
Basically, businesses and consumers alike are slowing spending and taking a wait-and-see attitude as they anticipate higher prices and economic disruption from the Trump administration’s protectionist policies. Americans expect the tariffs to be painful and they’re not happy about it.”
“”Well, they did sign up for it, actually. And this is what I campaigned on,” Trump said of the tariffs during an interview with ABC News that aired Tuesday.”
“At the end of the day, protectionism is rooted in fear and pessimism: fear that we’ll be outcompeted, and pessimism about the idea that a growing, dynamic economy can make us all better off. Libertarians are fond of making just such claims—so fond that Cass coined a term to mock us for it. Instead of tussling over the size of different constituencies’ relative shares of the fixed economic pie, the libertarian view is that our goal should be to grow the pie so everyone’s share is bigger. Cass calls this “economic piety,” and he rejects it. For him, the goal is not to grow the economy; it’s to direct the economy for the benefit of deserving constituencies such as blue-collar workers.
This is pure zero-sum thinking. It cements in place a mindset where one group’s gains necessarily come at some other group’s expense. To libertarians, technological innovation is a boon because it makes the whole economy more productive and everyone richer in the long run. But some people usually are hurt in the short run—think of the proverbial buggy-whip salesmen when automobiles come along. Protectionists are inclined to be suspicious of the tech sector and sympathetic toward policies that would tamp down economic dynamism in the name of protecting the would-be losers. The result, inevitably, is stagnation.”
“If you’re keeping track—and economists are making their best efforts—President Donald Trump’s trade war with the entire planet is running up quite a price tag. Even with a 90-day pause on some tariffs (except for China), the imposition or even just the threat of import taxes on goods from around the world and the inevitable retaliation by other countries is expected to take a bite out of the economy and people’s prosperity. Figuring out how much of a bite it will take is a trick, but there’s little doubt that it will be painful.”
China is the only main supplier of rare earths. Rare earths are key to military and industrial technologies. The Trump administration seems unprepared for China’s predictable move to ban rare earth minerals.