Trump keeps world waiting on tariffs, tries to hash out a plan

President Donald Trump’s tariff plans are the great unknown in the global economy right now — and it’s partly because his team is still trying to figure out what to do.

Tariffs were so central to Trump’s victorious election campaign that trade experts, and even some of his allies, were surprised when they went missing in action during his first days back in the White House.

The president threatened new duties on Mexico, Canada and China – but he didn’t actually impose any, even as he was taking steps to speed energy production, curb immigration and reshape the federal workforce. Instead, Trump’s Day One trade memo instructed his team to study unfair trade practices globally, and investigate whether Beijing had complied with a 2020 deal.

A sharp turn to protectionism in the US has the potential to upend economies and markets everywhere, so governments, businesses and investors around the world are desperate for a roadmap. Federal Reserve Chair Jerome Powell captured the uncertainty at his press conference on Wednesday, saying that the range of possible tariff impacts is “very, very wide.”

But Trump’s slower-than-expected rollout stems from unresolved questions within the new administration, according to people briefed on the internal deliberations.

The Trump team is still debating the fundamentals of tariff policy — like whether the taxes should be imposed across the board or targeted at specific countries and industries, and whether they should be reciprocal.

Small circle

Along with a lack of consensus among the administration’s economic team, they’re also short key staff.

Most nominees are still awaiting Senate confirmation. Howard Lutnick, Trump’s pick to be Commerce secretary, and Jamieson Greer, the nominee to be trade representative, may not be confirmed for several weeks, and there are few political appointees at either agency. Treasury Secretary Scott Bessent has told allies that his number one priority in 2025 is passing a sweeping tax package.

All of this means that tariff discussions are currently taking place among a small circle of advisers already at the White House, including Deputy Chief of Staff Stephen Miller, trade adviser Peter Navarro and National Economic Council Director Kevin Hassett, the people said.

On the campaign trail, Trump said he’d use tariffs to raise revenue, slash America’s trade deficit and bring industry back to the country.

He promised a 10% to 20% charge on all imported goods, as well as tariffs as high as 60% for China. Since his November election win, he’s also threatened a 25% tax on products from Canada and Mexico, the two biggest US trade partners.

On the universal tariffs and the ones slated for China, the Trump team is not close at all to making a decision, according to people briefed on the discussions.

For Canada and Mexico, Trump set a deadline of February 1, and trade experts anticipate that he’ll announce the promised tariffs around that date.

But because they’re unlikely to take effect for up to two weeks after an announcement, both countries would theoretically have time to negotiate with the White House, cave to Trump’s demands — he wants tighter curbs on the flow of people and drugs across borders –- and avoid the tariffs altogether.

It’s a key question about Trump’s trade plans more broadly: How many of the tariffs he floats are really intended as bargaining chips to help achieve other goals?

‘It’ll be enough’

That’s how things played out during the past weekend’s dramatic – and short-lived – standoff with Colombia.

Trump threatened to tariff the Latin American country after it refused to allow military flights carrying migrants from the US to land. He interrupted a Sunday afternoon golf game in Florida to post a message on the TruthSocial platform, warning of a 25% emergency charge on all imports from Colombia that could rise to 50% after a week. “These measures are just the beginning,” Trump wrote. “We will not allow the Colombian Government to violate its legal obligations.”

Within hours, a deal had been announced and the tariff threat rescinded. While it’s not clear if Trump got his way entirely, aides described the episode as a big win – and a vindication of the president’s approach to tariffs as a foreign-policy tool.

“It will probably only embolden Trump to use tariffs in the weeks and months ahead,” said Stephen Moore, an informal economic adviser to the president.

Trump hinted this week that he’ll keep the world waiting a little longer before unveiling his full tariff plan. “I have it in mind what it’s going to be,” the president said aboard Air Force One on Monday. “I won’t be setting it yet, but it’ll be enough to protect our country.”

Many analysts and investors warn that new trade barriers could slow economic growth and rekindle inflation.

“A substantial escalation of tariffs would raise prices for consumers, would reduce manufacturing employment, would make our domestic manufacturers less competitive and would invite retaliation,” said Michael Strain, director of economic policy studies at the American Enterprise Institute.

Strain said he was surprised that Trump hadn’t slapped tariffs on China, at least, as soon as he returned to the White House — and expressed skepticism that personnel shortfalls were the reason. “I don’t know why the president needs all of those people,” he said. “He’s done a bunch of stuff.”

‘So be it’

In his confirmation hearing in the Senate on Wednesday, Lutnick pushed back against some widespread objections to tariffs, describing the idea that they’d drive inflation up as “nonsense.”

He also hinted that some of Trump’s tariff threats – like the ones aimed at Mexico and Canada – are short-term tactics that countries can avoid if they bend to Washington’s demands, while others will serve longer-term goals of reshaping trade and manufacturing.

Howard Lutnick, chief executive officer of Cantor Fitzgerald LP and nominee for US commerce secretary, speaks during a Senate Commerce, Science, and Transportation Committee confirmation hearing in Washington.

Lutnick took a hawkish line on tariffs when he was in contention for the Treasury job back in November. His candidacy had the effect of pushing Bessent – who’s seen by markets as a more emollient figure — to go public with a full-throated endorsement of Trump’s views on tariffs, according to James Lucier, managing director at Capital Alpha Partners, a research group in Washington.

The result is that Trump “has people who are perfectly willing to support the president at tariffs, but who are also looking at getting what Trump wants without disrupting financial markets,” Lucier said.

Uncertainty over Trump’s policies and their impact on growth and inflation has contributed to a slide on global bond markets over the last couple of months.

Some members of Trump’s economic team say there are signs that investors are growing accustomed to tariff threats, which means the administration can wield them without causing too many jitters. Still, the real test will come when new import taxes are actually imposed.

In a CNBC interview last week, Jamie Dimon – chief executive of JPMorgan Chase — said that tariffs as an economic tool and weapon need to be put into perspective.

“If it’s a little inflationary, but it’s good for national security, so be it,” Dimon said in a CNBC interview. “I mean, get over it.”

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