{"id":1273,"date":"2025-05-07T10:34:14","date_gmt":"2025-05-07T10:34:14","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/trumps-threatened-tariffs-are-so-large-10-feels-like-a-relief\/"},"modified":"2025-05-07T10:34:14","modified_gmt":"2025-05-07T10:34:14","slug":"trumps-threatened-tariffs-are-so-large-10-feels-like-a-relief","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/trumps-threatened-tariffs-are-so-large-10-feels-like-a-relief\/","title":{"rendered":"Trump\u2019s Threatened Tariffs Are So Large, 10% Feels Like a Relief"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">There has been a mantra spreading among weary corporate executives who are becoming resigned to President Trump\u2019s tariffs while still hoping to avoid the worst of their effects: Ten percent is the new zero.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The statement refers to the 10 percent tariff that Mr. Trump put in place on most U.S. imports one month ago. Such a significant increase in U.S. tariffs would have been unthinkable a few years ago. But it no longer seems like such a big deal, compared with the truly large tariffs that Mr. Trump has already imposed or threatened elsewhere.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump\u2019s \u201cLiberation Day\u201d announcement on April 2 that he was planning tariffs of 10 percent to 60 percent on dozens of America\u2019s trading partners set off a rout in the bond markets and a flight from the U.S. dollar as investors panicked at the prospect of an economically devastating trade war. Mr. Trump also ratcheted up tariffs on China to a minimum of 145 percent amid a trade spat with Beijing, bringing much of the trade between the countries to a halt.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">That turmoil appears to have moderated Mr. Trump\u2019s impulses somewhat. The president quickly paused tariffs on most countries, giving them 90 days to negotiate trade deals instead.<\/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\">Mr. Trump also granted a lucrative exemption from China tariffs for makers of electronics and offered some limited relief for automakers. And he has hinted that he could do more, saying he likes to be \u201cflexible.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Investors have lapped up any signs of good news, even insubstantial ones. Stock markets have now regained nearly all of the losses they sustained after April 2, buoyed by comments from Trump administration officials that they are working to close trade deals with allies and looking for an opening to negotiate with China.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The speed with which investors have come to accept Mr. Trump\u2019s tariffs reflects an increasing embrace of tariffs as a policy tool. It also shows a decreasing tolerance in America for the predatory trade practices of countries like China, which has dominated global industries and systematically put rival manufacturers around the world out of business.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But it also indicates something about Mr. Trump and his negotiating style. By threatening gigantic tariffs in early April and then walking them back, the president seems to have increased the acceptance, at least in some circles, of the significant tariffs that remain in place.<\/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\">This is a classic example of the psychological effect known as anchoring, when a certain piece of information, like a high number thrown out in the course of a negotiation, can reset a whole frame of reference.<\/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\">Sekoul Krastev, a co-founder of the Decision Lab, a company that works with governments and organizations to apply lessons from behavioral science, said the anchoring effect was one of the more rigorous and tested in behavioral sciences. In all types of contexts, researchers have found that by throwing out a large number, they can quickly reset people\u2019s expectations of what is normal and appropriate.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">For example, Mr. Krastev said, a car salesman who wants to sell you a $50,000 car will show you an $80,000 one first. But the value doesn\u2019t even have to be related to the decision being made. In experiments, people asked to think about the height of Mount Everest were more willing afterward to spend more on a sofa than they would have spent previously, he said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI do think it\u2019s at play,\u201d he said. \u201cLet\u2019s say you set an anchor for really high tariffs \u2014 that\u2019s going to make the range of acceptable tariffs much higher than before.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The truth, of course, is that the tariffs currently in effect still constitute both a major change for global trade and a huge tax increase for the country. The United States still has a 10 percent \u201cuniversal\u201d tariff in effect on most imports globally, as well as 25 percent tariffs on imported cars, metals and goods from Canada and Mexico. Overall, according to the Budget Lab at Yale, consumers face an average effective tariff rate of 28 percent, the highest since 1901.<\/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\">Those tariffs may seem manageable compared with triple-digit tariffs now in effect against Chinese products and the double-digit tariffs that have been paused against dozens of other countries. But for some companies, tariffs of 10 to 25 percent are still enough to erase profit margins, stall expansion or hiring plans or even push them out of business. The U.S. Chamber of Commerce has warned that many small businesses in particular might not survive.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Speaking at the Milken Institute Global Conference in Los Angeles this week, Jane Fraser, the chief executive of Citigroup, said companies could withstand lower tariffs, though trade uncertainty had forced them to pause investment and hiring.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIf it is 10 percent, most of the clients we talk to say, \u2018Yeah, we can absorb that,\u2019\u201d she said. \u201cIf it is 25 percent, not so much.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Some of the moves that investors are interpreting as good news are also fairly minor retrenchments in a major increase in trade protectionism. The exception given to automakers last Tuesday, for example, was relatively small, though it sent the price of some automakers\u2019 shares higher that day. Mr. Trump gave an exception for tariffs on auto parts that were equal to 15 percent of a car\u2019s value for the first year, which shrinks to 10 percent in the second year before disappearing in Year 3. Car companies were also given relief from a 25 percent tariff on steel and aluminum, but only if they were paying a 25 percent tariff on foreign cars or parts.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">And while Beijing and Washington seemed to express more openness late last week to finding a solution to the trade standoff between the United States and China, the countries have a long way to go. Formal negotiations have not even started, and the United States has serious trade disputes with China.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">On Tuesday, Treasury Secretary Scott Bessent told lawmakers that there was no movement yet with China. \u201cChina we have not engaged in negotiations with as of yet,\u201d he said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Trump administration might choose to quickly drop some of its tariffs on China as a good-will gesture once the countries restart negotiations \u2014 but tariffs have risen so much that the United States might have to cut its tariffs by more than 100 percentage points to meaningfully restart trade.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Perhaps most important, despite being persuaded on occasion to show flexibility, Mr. Trump is still a self-described \u201ctariff man,\u201d reflexively drawn toward the power of an economic tool that he thinks is an effective way to persuade global companies to bring their factories to the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump continues to find ways to deploy tariffs that few had anticipated. In a post on Truth Social on Sunday, he proposed adding 100 percent tariffs to movies produced outside the country and said Hollywood was dying a \u201cvery fast death,\u201d arguing that this threatened U.S. national security. On Monday, the president said that tariffs on pharmaceuticals would be coming in the next few weeks and that he had already decided on the rate.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In a speech on Sunday, Maros Sefcovic, the European Union\u2019s commissioner for trade, said that \u201cmore U.S. tariff actions could well be on their way,\u201d pointing to investigations into lumber, pharmaceuticals, semiconductors, critical minerals and trucks.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">If all those investigations led to tariffs, he said, 97 percent of E.U. exports to the United States would be subject to taxes.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In an interview with NBC\u2019s \u201cMeet the Press\u201d broadcast on Sunday, Mr. Trump insisted that he would preserve the threat of tariffs, no matter what.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Asked if he would take the possibility that some tariffs would be permanent off the table, Mr. Trump demurred.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cNo, I wouldn\u2019t do that because if somebody thought they were going to come off the table, why would they build in the United States?\u201d he said.<\/p>\n<p class=\"css-798hid etfikam0\">Jeanna Smialek<!-- -->, <!-- -->Alan Rappeport<!-- --> and <!-- -->Tony Romm<!-- --> contributed reporting.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>There has been a mantra spreading among weary corporate executives who are becoming resigned to President Trump\u2019s tariffs while still hoping to avoid the worst of their effects: Ten percent is the new zero. The statement refers to the 10 percent tariff that Mr. Trump put in place on most U.S. imports one month ago. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1274,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[954,161,955,199,953,197],"class_list":["post-1273","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-feels","tag-large","tag-relief","tag-tariffs","tag-threatened","tag-trumps"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1273","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=1273"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1273\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1274"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}