Guide to getting lost (yes, lost) in Trump’s tariff threats

Donald Trump’s tariff threats have not ceased to be credible, but they have ceased to be reliable. The U.S. president wants to reduce the trade deficit by taxing imports, but in the verbosity of his almost daily public appearances, Trump is perfectly capable of arguing one thing and the exact opposite as well. Paying attention to each of his assertions is probably the best way to get utterly lost.

So far, there are only new 10% tariffs on a portion of Chinese shipments, and these seem to have come into effect somewhat by accident. However, there are threats being made left and right for various reasons that intersect with each other. Uncertainty and insecurity about Trump’s trade policy has begun to take its toll on the economy. Inflation expectations have risen and investor confidence has deteriorated.

“Tariff” remains one of Trump’s favorite words, even though he has demoted it from being his absolute favorite to somewhere below “God,” “religion” and “love.” From so much use as a threat, however, it is starting to get a little worn out. Trump’s protectionism would suggest that the world is approaching the biggest trade war in many decades. That is, of course, if the threats are serious.

Trump’s dialectic involves placing tariffs on countries and on products, sometimes for economic reasons and sometimes for political ones. He often gives the impression that he uses the threat of tariffs as a bargaining chip to obtain concessions. These are some of the fronts that Trump has opened in his offensive.

Mexico and Canada

The United States has a free trade agreement with its two neighbors that was negotiated by Trump himself during his previous term, the United States-Mexico-Canada Agreement (USMCA). However, the trade deficit with both countries, especially with Mexico, has skyrocketed in recent years. Trump threatened tariffs on Mexican cars during his presidential campaign, but he only launched a more serious ultimatum after winning the election. He said he would impose 25% tariffs on all their products on day one if Mexico and Canada did not stop fentanyl trafficking and the flow of immigrants into the U.S..

The first day in office arrived and Trump said he would apply the tariffs on February 1. A few days before that date, Reuters reported that Trump planned to delay the tariffs by a month to March; the White House flatly denied this and said that the tariffs would be applied on February 1 as announced. But that day arrived and goods continued to circulate freely. That same afternoon, Trump signed an executive order for the tariffs to be applied from February 4, causing an earthquake in the markets. However, Trump then spoke with the president of Mexico, Claudia Sheinbaum, and the prime minister of Canada, Justin Trudeau, and in exchange for some minor concessions, he postponed the tariffs by a month until March 4.

Trump has repeatedly insisted this week that the date was still in place, but when his first Cabinet meeting was held on Wednesday, he said both that and something else entirely: that the tariffs would be implemented on April 2. “I’m not going to stop the tariffs,” he said at first, before describing how he believed the United States had been the victim of years of mistreatment by its neighbors. And then he was asked when they would go into effect, and he replied: “April 2.” The Mexican peso and the Canadian dollar reacted by rising. Commerce Secretary Howard Lutnick tried to intervene to clarify the situation, but in the end it was not entirely clear whether the tariffs on Mexico and Canada would be postponed for another month, or whether Trump was just getting confused with some of his other tariffs.

On Thursday, Trump himself tried to clear up the mess. He assured that taxes on Mexican and Canadian products will be applied from March 4, and that April 2 is the date for what he calls reciprocal tariffs. Even so, we will have to wait and see what transpires between now and Tuesday.

China

During his campaign, Trump promised to impose 60% tariffs on all Chinese products. Instead, after the election, he threatened China with 10% duties. The process followed the same path as with Mexico and Canada, except that Trump said he would talk to President Xi Jinping (apparently in an attempt to postpone the tariffs in exchange for concessions on fentanyl) but it seems that the Chinese president was not swayed. The tariffs went into effect, but American customs were not prepared to apply them, so they collapsed. Trump was forced to backtrack and exempt most shipments, those under $800 from platforms such as Temu and Shein. Now, after his blunder with Mexico and Canada, he has announced another 10% tariff on Chinese products starting on Tuesday, March 4.

European Union

Trump has had the European Union in his sights since his first term in office. He wrongly considers value-added tax (VAT) to be a protectionist and discriminatory measure against American products and blames it for the deficit in the trade of goods (which is largely offset by the balance of services).

The president singled out the EU and VAT specifically when he announced what he calls reciprocal tariffs. Although it breaks with the rules of the World Trade Organization and its most-favored-nation clause, the principle is simple: impose the same tariffs on other countries as those imposed on the United States. It sounds fair. However, when all kinds of subjective elements are thrown into the mix and VAT is interpreted as what it is not, the result can be anything at all.

In fact, before even waiting for the calculations, Trump announced on Wednesday that tariffs on the European Union will be 25%. In his reciprocal trade order, Trump was talking about countries, not entire trading blocs. Again, it is not entirely clear whether the 25% refers to a general tariff or whether it is for specific products that Trump has identified as requiring protection, such as aluminum, steel, automobiles, semiconductors and pharmaceutical products and to which he has said he would apply the tariff.

His animosity toward the EU was clear on Wednesday: Trump said he considered it “a different case” than other situations because he believed the group had been “formed in order to screw the United States.” “The European Union is a different case than Canada, a different kind of case, they’ve really taken advantage of us in a different way,” he said.

Trump also approved a decree threatening countries that have a Google tax with trade and tax reprisals. He even floated the threat of unspecified tariffs on the European Union (and also the United Kingdom) if they require social media to adopt content moderation policies that combat disinformation and hate speech.

Reciprocal tariffs

The so-called reciprocal tariffs are not only for EU countries, but for the whole world. The United States will take into account not only tariff levels, but also non-tariff barriers, including regulatory, monetary, fiscal or other types. Lutnick has promised to have the calculations ready by April 1, although Trump prefers to act as of April 2 because April 1 is April Fool's Day.

Aluminum and steel

Trump has approved widespread tariffs of 25% on aluminum and steel, which are set to take effect on March 12. He also imposed tariffs on these products during his first term. The president has hinted that these tariffs would be superimposed on those corresponding to each country. In this way, for example, Mexican steel and aluminum would hypothetically be subject to a 50% tariff. For another metal, copper and its derivatives, Trump has ordered an investigation to study whether to also impose tariffs.

Cars, chips and pharmaceuticals

Trump’s magic tariff figure is 25%. He has also threatened such import taxes on cars, semiconductors and pharmaceuticals. It is not clear when they will take effect, whether they include exceptions or whether they overlap with other geographic tariffs, such as reciprocal tariffs or those planned for Mexico and Canada.

Oil and gas

Trump announced that he would approve tariffs on oil and gas on February 18, in an example of one of those dates that he occasionally throws around somewhat arbitrarily without a clear reason. February 18 came and went and nothing happened. Trump has barely spoken about oil and gas tariffs again.

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