Business reporter, New York
This week, US President Donald Trump reversed tariffs on his closest neighbors and biggest trading partners almost immediately after implementing them.
However, amidst this whirlwind of policy changes regarding Canada and Mexico, the White House has affirmed its commitment to its economic vision. The administration appears prepared to face short-term economic consequences in pursuit of that vision.
“There’ll be a little disturbance,” Trump stated during his address to Congress on Tuesday. “But we’re okay with that.”
In light of the sudden policy shifts Trump has made this week concerning tariffs, particularly with financial markets declining and US businesses voicing concerns, it’s reasonable to doubt the administration’s commitment to using trade strategically.
Some may view Trump’s tariff threats as mere rhetoric, inferring that he prefers a tough exterior but backs down when faced with economic repercussions.
Yet, this perception is somewhat countered by the ongoing trade conflict with China, which began during his first term and has escalated significantly.
Within weeks, Trump has increased tariffs on all Chinese imports to at least 20%.
As a result, the average effective tariff rate on Chinese imports now hovers around 34%, with certain sectors, like electric vehicles and steel, facing even steeper tariffs.
The 25% tariff on goods from Mexico and Canada hasn’t been entirely eliminated either. It remains on products that do not comply with a trade agreement Trump established during his initial term – hence, some products from both countries will still incur this charge.
Furthermore, the White House claims that its anticipated reciprocal tariffs aimed at nearly all US trade partners are still forthcoming. They plan to reveal details on April 2, with rates designed to counter what they see as unfair policies imposed by other nations, such as taxes on US tech companies, Value-Added Taxes, or similar import regulations.
“It’s a certainty – reciprocal tariffs are coming,” Peter Navarro, Trump’s senior advisor on trade and manufacturing, mentioned during a CNBC interview on Friday.
He asserted that there are signs indicating that these threats are motivating car manufacturers to take action and enhance their supply chains in the US – exactly the kind of investment Trump anticipates will follow from his tariffs.
“They’re getting the picture,” Navarro affirmed.
Navarro and his colleagues emphasize that the specific details of tariff rates are not their primary concern. Instead, they are leveraging trade tariffs to shape a new version of America, one characterized by a different dynamic with its global partners.
This envisioned America would feature more domestic manufacturing, a leaner government, and reduced costs for military defense of its allies.
Treasury Secretary Scott Bessent – who previously led a Wall Street hedge fund and is not typically aligned with tariff proponents – highlighted ongoing discussions in Germany about increasing its military expenditure as a significant early victory this week.
“The international trading system is a complex web of relationships – military, economic, and political. One cannot be viewed in isolation,” he said while advocating for the administration’s approach to a tariff-skeptical audience at the Economic Club of New York.
“This is how President Trump perceives the world – not as a zero-sum game, but as interconnected relationships that can be restructured to benefit the American people.”
For Trump, tariffs play a pivotal role in reshaping that network. And the treasury secretary made it clear that the anticipated short-term drawbacks – higher costs – are an acceptable compromise.
“Access to inexpensive goods does not represent the core of the American dream,” Bessent argued.
Currently, polls suggest that Trump’s support base continues to rally behind him. However, how the coming months unfold – particularly regarding consumer prices – could serve as a real challenge for that narrative.
