{"id":1187,"date":"2025-04-24T14:40:28","date_gmt":"2025-04-24T14:40:28","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/trumps-tariffs-bump-into-reality-as-economic-strategy-wavers\/"},"modified":"2025-04-24T14:40:28","modified_gmt":"2025-04-24T14:40:28","slug":"trumps-tariffs-bump-into-reality-as-economic-strategy-wavers","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/trumps-tariffs-bump-into-reality-as-economic-strategy-wavers\/","title":{"rendered":"Trump\u2019s Tariffs Bump Into Reality as Economic Strategy Wavers"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">After weeks of bluster and escalation, President Trump blinked. Then he blinked again. And again.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">He backed off his threat to fire the Federal Reserve chairman. His Treasury secretary, acutely aware that the S&amp;P 500 was down 10 percent since Mr. Trump was inaugurated, signaled he was looking for an offramp to avoid an intensifying trade war with China.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">And now Mr. Trump has acknowledged that the 145 percent tariffs on Chinese goods that he announced just two weeks ago are not sustainable. He was prompted in part by the warnings of senior executives from Target and Walmart and other large American retailers that consumers would see price surges and empty shelves for some imported goods within a few weeks.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump\u2019s encounter with reality amounted to a vivid case study in the political and economic costs of striking the hardest of hard lines. He entered this trade war imagining a simpler era in which imposing punishing tariffs would force companies around the world to build factories in the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">He ends the month discovering that the world of modern supply chains is far more complex than he bargained for, and that it is far from clear his \u201cbeautiful\u201d tariffs will have the effects he predicted.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">This is not, of course, the explanation of the events of the past few days that the White House is putting out. Mr. Trump\u2019s aides insist that his maximalist demands have been an act of strategic brilliance, forcing 90 countries to line up to deal with the president. It may take months, they acknowledge, to see the concessions that will result. But bending the global trade system to American will, they say, takes time.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cHave some patience and you will see,\u201d the president\u2019s press secretary, Karoline Leavitt, told reporters on Wednesday.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump himself insisted to reporters at the White House that everything was going according to plan.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cWe have a lot of action going on,\u201d he said, repeating his now-familiar line that \u201cwe\u2019re not going to be a laughingstock that got taken advantage of by virtually every country in the world.\u201d He suggested again that the United States needed to return to the halcyon era from 1870 to 1913 \u2014 the year the country began to impose income taxes \u2014 when tariffs funded the government and \u201cwe had more money than anybody.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">And he repeated his prediction that \u201cnow we\u2019re going to be making money with everyone, and everyone\u2019s going to be happy.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">But happy did not seem to be the vibe around the White House in recent days.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">It started with Mr. Trump\u2019s declaration that the \u201ctermination\u201d of the Fed chair, Jerome H. Powell, whom he appointed in 2017, \u201ccannot come fast enough.\u201d His most senior economic adviser, Kevin Hassett, went further, saying the administration was looking at the legal options to remove him.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump\u2019s complaint is that Mr. Powell will not cut interest rates, for fear of stoking inflation. But the president was clearly concerned about the warnings from economists that the country could be headed to recession \u2014 one of his own making, one that his critics are already trying to label the Trump Slump even before it happens.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The tone of his comments seemed to suggest that if recession does come, the blame will fall on Mr. Powell.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But once Mr. Trump declared \u201cif I want him out, he\u2019ll be out of there real fast, believe me,\u201d another market sell-off began. It made little difference that he doesn\u2019t have the power to dismiss the Fed chair, as Mr. Powell has noted in recent days. The mere threat of it seemed to accelerate the sense that the United States has become the biggest source of market instability in the world.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Then, on Tuesday, Mr. Trump changed his tune. \u201cI have no intention of firing him,\u201d Mr. Trump said of Mr. Powell. That didn\u2019t stop him from continuing his critique of Mr. Powell as \u201cMr. Late\u201d with rate cuts, but it was enough to reverse the market sell-off.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The next walk-back came with China.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The White House kept hinting that the Chinese were beginning to negotiate, seeking a way to end the tariffs. In fact, the strategy that Beijing appeared to be following was to wait for Mr. Trump to feel the pain of his own actions. The expected phone call from President Xi Jinping never came. And Mr. Trump didn\u2019t want to be the first to call, either \u2014 a sign of desperation.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">For weeks, Treasury Secretary Scott Bessent seemed in obvious pain as he tried to justify the application of tariffs that, by many measures, outstrip those imposed by the Smoot-Hawley Act in 1930. (It is a historical comparison that no one in the White House wants to touch \u2014 other than to declare it a false analogy \u2014 because the cycles of retaliation triggered by that act of Congress worsened the Great Depression.)<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cNo one thinks the current status quo is sustainable\u201d at those tariff rates, Mr. Bessent told investors at a closed-door meeting on Tuesday in Washington, where his comments <a class=\"css-yywogo\" href=\"https:\/\/www.cnbc.com\/2025\/04\/22\/bessent-trump-tariffs-china-deescalate.html\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">immediately leaked<\/a>. He said he was looking for a de-escalation with Beijing, which \u201cshould give the world, the markets, a sign of relief.\u201d But he admitted that any negotiation with China was going to be slow and painful, \u201ca slog.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In private, some Trump officials concede that they did not accurately predict China\u2019s reaction. Mr. Trump seemed to expect China to be among the first to come begging for relief, given the size of its exports to the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cBack in 2017, the first time Trump imposed tariffs on China, Beijing was caught by relative surprise,\u201d Nicholas Mulder, an economic historian at Cornell University, said on Wednesday. \u201cBut they have been preparing for further escalation for many years,\u201d he said. Now, \u201cthey have much more tolerance for economic pain, and a greater ability to weather this ratcheting up.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">By late Tuesday Mr. Trump was publicly mulling lowering the Chinese tariffs, saying \u201c145 percent is very high, and it won\u2019t be that high, not going to be that high.\u201d He added, \u201cIt got up to there,\u201d as if the number had floated to that height by itself.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On Wednesday, Ms. Leavitt said Mr. Trump would not lower the tariffs until the United States and China negotiated a new trade agreement \u2014 another mixed message out of the White House on the state of negotiations.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cLet me be clear: There will be no unilateral reduction in tariffs against China,\u201d Ms. Leavitt said on Fox News.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Other powers are clearly watching the Chinese approach and taking notes. Mr. Xi\u2019s closest ally, President Vladimir V. Putin of Russia, is engaged in his own high-stakes negotiation with the United States, over Ukraine. Iran is in the midst of talks about its nuclear program. They are looking for signs of weakness, or little indications of what could test Mr. Trump\u2019s nerves.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Elizabeth Economy, who has written extensively about Chinese trade policy and served in the Commerce Department during the Biden administration, said the Trump team appeared to have ignored three fundamentals about China: the depth of the Chinese retaliatory tool kit, the extent of China\u2019s economic leverage over the United States, and the ability of Mr. Xi to make the United States the scapegoat for China\u2019s economic ills.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThis game of chicken has done nothing but enable Xi Jinping to boost his standing in and outside China, while the United States appears uninformed and unmoored,\u201d she said.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>After weeks of bluster and escalation, President Trump blinked. Then he blinked again. And again. He backed off his threat to fire the Federal Reserve chairman. His Treasury secretary, acutely aware that the S&amp;P 500 was down 10 percent since Mr. Trump was inaugurated, signaled he was looking for an offramp to avoid an intensifying [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1188,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[874,764,875,876,199,197,877],"class_list":["post-1187","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-bump","tag-economic","tag-reality","tag-strategy","tag-tariffs","tag-trumps","tag-wavers"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=1187"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1187\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1188"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}