New York, July 25 (UNI) Even as President Donald Trump’s vows to roll out punishing new tariffs on August one have barely made a ripple with investors who are convinced he’ll once again back down, the White House officials have affirmed they’re serious this time.
Despite Wall Street giving a shrug to the potential fallout, Trump’s aides preparing to raise tariffs on the United States’ closest allies are taking the markets’ complacency as validation for their policies, arguing that it shows corporations across the world are adjusting to the administration’s disruptive trade strategy, reports CNN.
Unlike in April, when widespread panic forced Trump to shelve his initial across-the-board tariffs, the stock market now is hitting new highs in spite of the heightened trade tensions. Predictions that retailers would jack up consumer prices en masse have yet to come true, and the labour market has remained steady.
The prevailing Wall Street belief behind that stability is that Trump will ultimately ease off his threat to impose even bigger tariffs, a pattern he’s repeatedly followed.
But White House aides, emboldened by a sudden string of trade pacts, say they’re drawing a different conclusion from the economic tranquility.
“It’s definitely not the TACO sh*t,” a White House official said, referring to the newly popular Wall Street acronym that stands for Trump Always Chickens Out. “They know POTUS is serious about this and they’re making adjustments to their business models and supply chains to be able to absorb it.”
Those directly contradictory takeaways in the White House and on Wall Street have further heightened the stakes ahead of Trump’s self-imposed August deadline, as major trade partners like the European Union, South Korea and India race to strike deals with the administration to avert steep tariffs.
So far, the Trump administration has only announced frameworks for trade deals with six countries — the UK, China, Indonesia, Vietnam and most recently the Philippines and Japan on Tuesday.
Some are more specific than others, nevertheless all would impose significantly higher tariffs than the countries faced before Trump took office.
The White House is still planning to hit dozens of other trading partners with double-digit duties next month, in a sweeping move that could disrupt global supply chains and spark retaliatory measures that further strain international trade and push up prices.
On top of that, economic experts worry the developments will send shockwaves through the financial markets, putting billions of dollars at risk as investors scramble to factor in the impact all at once.
Trump has already imposed tariffs on trading partners at levels not seen in nearly a century, ratcheting up levies on allies like Canada and Mexico and taxing autos and some other imports at higher rates.
The president initially sought to slap 10 percent tariffs on nearly every country in the world. The economic backlash, particularly in the now-steadier bond market, persuaded him to put those on pause.
Since then, Trump has raised his administration’s tariff rates in piecemeal fashion with far less resistance from Wall Street investors, who have grown desensitized to the president’s stream of trade declarations and threats.
White House officials have expressed confidence they’ll reach a major trade agreement with the EU that could avert further escalation with the 27-nation bloc, though the talks remain fluid.
Investors have taken those ongoing negotiations as proof of their belief that Trump will seek an off-ramp, cheering each successive deal. But Trump allies who are skeptical of the administration’s tariff strategy worry that even with those pacts, the market has grown overly optimistic about the longer-term impact of the president’s plans.
On other hand, White House officials have expressed confidence they’ll reach a major trade agreement with the EU that could avert further escalation with the 27-nation bloc, though they expect talks to run right up against the Aug. 1 deadline.
Yet, among Trump aides and advisers who have weathered the initial market freakout in April, the muted reaction to their trade moves since then has solidified their conviction that widespread fears over increasing inflation and an economic downturn are overstated.
