Okay, let’s do this. President-elect Donald Trump has vowed to raise taxes on imported goods immediately after taking the oath of office.
President Trump: “On January 20th, as one of my first executive orders, I will sign all necessary documents to impose a 25% tariff on Mexico and Canada on all products imported into the United States.” ” Posted Monday night Truth Social.
President Trump said in a statement that the tariffs are being imposed in response to “an influx of thousands of people” across the border from two of the United States’ neighboring countries, including Mexico and Canada, which are receiving an influx of drugs and drugs. The tariffs will remain in place until measures are taken to stop them. immigration. “Until they do, it’s time for them to pay a very high price,” Trump concluded.
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President Trump promised 10% tariffs in another post. For all imports from China— to be added on top of tariffs already raised during his first term.
Some may object to the idea that it makes any sense at all to solve the problem of undocumented border crossings with tariffs (which doesn’t really make sense) or to deal with customs flows. No. illegal Drugs subject to tax legally Imported (not really). Still, the most shocking thing about Monday’s announcement is that Trump still doesn’t seem to understand that Americans will be paying for the new tariffs.
It is threatening to impose tariffs on imports from Canada and Mexico. $210 billion tax increase. Imposing these would mean higher prices for many fresh fruits and vegetables currently imported from Mexico, and especially higher prices for crude oil imported from Canada.
Fortunately, Americans are now less sensitive to grocery store prices and gas station prices.
What about USMCA??The new tariffs would likely violate the United States-Mexico-Canada Agreement (USMCA). trade agreement Trump negotiated the deal during his first term. Breaking the agreement would likely spark a continent-wide trade war that would jeopardize $1.5 trillion in annual trade. washington post report.
Alberto Villarreal, managing director of Nepanoa, a consulting firm that helps companies manage cross-border trade, said, “If President Trump immediately and unilaterally imposes tariffs, it would be a threat to USMCA for its nuclear program.” It would mean that.” said Wall Street Journal.
Already trying to explain the price hike. Scott Bessent, President Trump’s nominee for Treasury secretary, is trying to stay ahead of the tariff news cycle. In an interview on Saturday, he insisted the new tariffs would not trigger a return to higher inflation. “Tariffs can’t be inflationary, because unless you give people more money, when the price of one thing goes up, you have less money to spend on other things, and you don’t get inflation,” Bessent said. said. said Larry Kudrow.
Bessent is correct that, in the strictest sense of the word, inflation is always a monetary phenomenon. Tariffs operate in the realm of fiscal policy, but the outcome would be much the same.
Think of it this way. There are two ways that consumers’ purchasing power decreases. One way is that the value of the dollar decreases and you have to spend more dollars to buy the same amount of goods. That’s inflation, and it’s something anyone who’s been to the grocery store in the past few years knows all too well.
The second way is that the product itself becomes more expensive, which happens when tariffs are imposed. The end result is the same. You have to spend more dollars to buy the same amount of things as before. And economists are already warning that tariffs will cause prices to rise. especially at the grocery store.
Essentially, Mr. Bessent said, Americans are not getting poorer because of inflation, they are getting poorer because the Trump administration is determined to raise taxes on many things Americans buy (“less money to spend”). ). . This may be a meaningful difference in an economics class, but I doubt it matters all that much to consumers already tired of years of price increases. Good luck, baby!
Is it all a bluff? Thankfully, the tariffs will not be introduced through the president’s social media posts, and there are still nearly two months before President Trump can take more substantive action. This has led some observers to conclude that Monday’s threat is simply the opening salvo in what President Trump hopes will be a new round of trade policy negotiations. President Trump seems to be trying to include immigration and the war on drugs.
“Investors don’t fully believe the levy will ultimately be implemented,” said one Wall Street analyst. told CNBC Tuesday morning. But even if he promises new tariffs on his first day in office, there appears to be little room for negotiation.
A sitting president’s ability to sabotage trillions of dollars of private business transactions with little oversight from Congress, even if it’s just a bluff, is something Sen. Rand Paul (R-Ky.) wants Congress to approve. This should put even more pressure on lawmakers to pass the bill. Approval of new tariffs. The bill could be the last chance for lawmakers to remove the “tax increase” button from the Oval Office before President Trump arrives.
In memory: Fred Smith, the eccentric and brilliant founder of the Competitive Enterprise Institute (CEI), died Saturday night.
“He was sociable, extremely intelligent and had strong beliefs. fun,” I will write CEI senior economist Ryan Smith paid tribute to his former boss. “Everyone in Washington knew Fred, and Fred knew everyone. Even people who opposed everything he stood for couldn’t help but like him. He was always smiling and laughing, even during intellectual and serious discussions. People around him couldn’t help it.”But Fred was a representative of Washington in the best sense of the word. ”
Many in the free market movement owe their work and inspiration to Smith. For someone like me who never worked directly for Smith or CEI, his reputation (and that of his still living wife Fran) was always larger than life. That part won’t change.
quick hit
- President Joe Biden I want to receive Medicare and Medicaid coverage. The cost of a new anti-obesity drug would make about 7.4 million elderly and poor Americans eligible for prescriptions. The incoming Trump administration must formally approve the change.
- Special Prosecutor Jack Smith filed the following motion on Monday: Drop all charges against President-elect Donald Trump He was also recognized for his role in trying to overturn the 2020 election and in a lawsuit over President Trump’s possible mishandling of classified documents.
- Spain will be like this Spend $22 billion to shut down nuclear power plantsthis seems like an expensive way to reduce energy.
- After serving more than two months in prison, Backpage founder Michael Lacey has been released on bail while he appeals his money laundering conviction. But a federal judge ruled that two of Lacey’s co-workers must remain in prison pending the appeal process.
