
Articles
Trump Hails Tariffs as US Economy Barrels Into Trade Wars
President Donald Trump took the
lectern Tuesday for his primetime address beset by warning signs about the US
economy, and acknowledged to Americans there could be more discomfort ahead.
Trump defended his plan to remake the
world’s largest economy through the biggest tariff increases in a century,
saying it would raise “trillions and trillions” in revenue and rebalance
trading relationships he called unfair. He cast the economic pain the levies
are expected to cause in the form of higher prices as a “little disturbance”
the nation ought to be able to overcome.
“Tariffs are about making America rich
again and making America great again. And it’s happening, and it will happen
rather quickly,” he said. “There’ll be a little disturbance, but we’re OK with
that. It won’t be much.”
For large swaths of his record-setting
100-minute joint address to Congress on Tuesday night, though, Trump preferred
to spend time on issues he sees as his political strengths. He hammered topics
like transgender rights, migrant crime and diversity, equity and inclusion, and
said relatively little about consumer prices.
The president proclaimed he was leading a
“common-sense revolution,” saying “our country will be woke no longer.”
President Donald Trump calls for an end to
a $52 billion semiconductor subsidy program that’s spurred more than $400
billion in investments during a primetime address to a joint session of
Congress. Source: Bloomberg
Trump turned to inflation only after a
19-minute opener. He blamed high prices for eggs and other goods on his
predecessor, Joe Biden, and offered few new ideas to lower costs.
Some of his proposals at times sounded like
magical solutions, including complex energy projects that could take years to
complete and using savings from Elon Musk’s cost-cutting campaign, which
have amounted to a small fraction of the federal deficit, to help pay down the
debt.
The speech came at a pivotal moment. The
president’s approval rating, which was positive in the weeks after his November
election victory, has gone underwater in a series of polls. Data shows new
strains on the economy as factory activity stagnates, inflation simmers,
consumer confidence ebbs, and stocks lag behind equity markets in other
countries.
“We are just getting started,” President
Donald Trump says during a primetime address to a joint session of Congress.
Source: Bloomberg
Hours before he spoke, the S&P
500 Index closed at its lowest level since before the November
election as Trump’s threats of trade wars with Canada and Mexico became a
reality.
US stock futures pointed to a turnaround on
Wednesday, partly tied to Commerce Secretary Howard Lutnick saying
the administration was already considering limited relief for the
North American neighbors hit Tuesday with 25% tariffs on most of their
shipments to the US.
An effort to disrupt Trump’s address by
Democratic Representative Al Green was drowned out by Republican
jeers and the lawmaker was escorted out of the chamber. Other Democrats held up
signs with slogans such as “Musk Steals” and “False,” that were mocked on
social media.
“I could find a cure to the most
devastating disease,” Trump replied. “And these people sitting right here will
not clap.”
In the face of challenging events, he has
often resorted to his showmanship and ability to command the nation’s attention
to avoid political damage.
Trump highlighted the heart-wrenching
stories of invited guests, including freed American hostages. A 13-year-old boy
diagnosed with cancer with ambitions of becoming a police officer was made a
Secret Service agent by the agency’s director and Trump told a high school
senior that he had earned admission to the US Military Academy at West Point.
Border Security
He touted his immigration and border
policies, which have ramped up deportations of undocumented migrants and
designated Mexican cartels and other foreign gangs as terrorist organizations.
He called on Congress to pass additional funds for border security.
But similar to the economy, the campaign
promises that Trump made during the 2024 election have collided head-on with
the realities that he’s confronted back in the White House. Inflation is tough
to tame and wars are difficult to resolve.
On the world stage, the president sought to
cast himself as a peacemaker, even as he boasted about withdrawing the US from
international institutions. He praised Ukrainian President Volodymyr
Zelenskiy for saying he would accept a natural resources deal that was
scuttled last week after a disastrous meeting at the White House, while
reiterating his demand for an end to the conflict and expressing reservations
about continued US military aid to Kyiv.
Trump spoke just hours after hitting Canada
and Mexico — the nation’s largest trading partners — with the new tariffs and
doubling levies on Chinese imports to 20%. While those moves are aimed at
boosting domestic jobs and production in his vision for a “golden age of
America,” economists warn that trade wars will reignite inflation,
close export markets for US businesses and weigh on consumer sentiment.
Trump reiterated his threat to impose 25%
tariffs on aluminum and steel and to put in place reciprocal tariffs on all
countries with barriers to American imports, saying that the US had been
“ripped off for decades by nearly every country on Earth, and we will not let
that happen any longer.”
“Whatever they tariff us, we tariff them,”
Trump said. “Whatever they tax us, we tax them. If they do non-monetary tariffs
to keep us out of their market, then we do non-monetary barriers to keep them
out of our market.”
Trump touted his tariff moves as more
effective at bringing jobs to the US than Biden’s efforts, which included the
Chips and Science Act and its billions in subsidies to spur domestic
semiconductor manufacturing. Trump urged lawmakers to eliminate the Chips Act
and said he would not give chipmakers any more funds from the law.
Separately, Trump announced plans to
establish an office of shipbuilding at the White House. And he said he had
spoken to the heads of the three largest US automakers Tuesday before his
speech. Car companies are particularly concerned that the tariffs on Mexican
and Canadian goods could ratchet up prices even on vehicles assembled in the
US.
Trump is casting his bid to spur domestic
energy production as an antidote for inflation. Yet he has yet to implement
potential policies that could encourage more domestic oil demand or lower the
costs of energy production. And even so, it’s not clear the oil industry will
go along. Oil executives who suffered huge losses from collapsing energy prices
during the coronavirus pandemic have shown little appetite to dramatically
bolster output as they focus on shareholder returns.
Even Trump’s bid to invigorate a
long-stalled natural gas pipeline and export project in Alaska would take years
to construct, delivering only limited dividends for American consumers, while
supplying the fuel to residents inside the state and Asian allies abroad.
In his second term, Trump has moved rapidly
to implement his policies with a stream of executive actions that are reshaping
the US government and its economic and security ties with the world.
Musk’s DOGE Cuts
Musk, who is overseeing an effort to slash
the federal government’s workforce and spending through the Department of
Government Efficiency, was in the chamber and received a standing ovation from
Republicans.
Those moves have led to consternation
throughout Washington and concerns even from some Republicans over their scope.
Democrats highlighted that wariness, with some lawmakers inviting former
government workers who lost their jobs.
Trump gave a lengthy list of government
programs and grants he cast as examples of waste, and reiterated previous
claims — since walked back by other government officials — suggesting that
Social Security was providing benefits to people hundreds of years old.
Democrats frequently interjected to jeer the claims.
Trump’s appearance before Congress
presented a crucial opportunity to press fellow Republicans on legislative
action. The party is grappling with how to extend expiring tax cuts from
Trump’s first term, approve additional benefits he promised during the campaign,
and his calls to balance the budget.
“I’m calling for no tax on tips, no tax on
overtime and no tax on Social Security benefits for our great seniors,” Trump
said.
Source: www.bloomberg.com
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