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President Trump delivers remarks during a Cabinet meeting at the White House on Wednesday. During the meeting, Trump said he was looking at implementing tariffs against Canada and Mexico starting in April. Andrew Harnik/Getty Images hide caption
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Andrew Harnik/Getty Images
President Trump has suggested that there could be another delay for his proposal to apply 25% tariffs on Mexican and Canadian goods.
The tariffs were initially scheduled for Feb. 1. However, at the last minute, Trump gave the allies a reprieve, after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum assured Trump that they were taking action to stop the flow of fentanyl and immigrants into the United States. Trump then delayed the tariffs to early March.
The delays are part of a pattern of vague and changeable tariff pronouncements, leading many to be unsure of how seriously to take the threats.
This week has added more confusion. On Monday, Trump said the tariffs on Canada and Mexico would go ahead next week. But at his Cabinet meeting on Wednesday, Trump said he was looking at April.
"April 2 — I was going to do April 1, but I'm a little bit superstitious, so I made it April 2 — the tariffs go on," he said when asked about the taxes. "Not all of them, but a lot of them."
But it was also uncertain how hard and fast that new deadline would be. During Trump's wide-ranging, hourlong exchange with reporters during the Cabinet meeting, Commerce Secretary Howard Lutnick suggested that the delay was contingent on Canada and Mexico showing they had made progress on slowing the flow of fentanyl.
Nothing about how Trump talks about tariffs is normal — not only because Trump is threatening tariffs on a weekly, even daily, basis, but also because it's often unclear if or when many of those tariffs will happen, not to mention how big they'll be. That uncertainty itself can hurt the economy.
Here are some of the tariffs Trump has proposed
Trump ran for president promising big tariffs, telling crowds that "tariff" was "the most beautiful word in the dictionary." Tariffs are taxes that American businesses pay to import goods from overseas.
Thus far, one tariff has gone into effect this term: a 10% tariff on Chinese goods.
But Trump has proposed many more. He signed an executive order expanding steel and aluminum tariffs, to go into effect on March 12, though questions remain as to how broadly they'll be applied.
Trump has also signed an order aimed at imposing "reciprocal tariffs," potentially on all kinds of products from all trading partners. That order doesn't itself impose tariffs. Instead, it sets in motion a research process. Lutnick has said the administration could start imposing tariffs in early April.
Trump has also talked about cars and lumber. And this week, he announced an investigation that could lead to new tariffs on copper.
Echoes of "infrastructure week"
President Trump, joined by Health and Human Services Secretary Robert F. Kennedy Jr. (left) and Commerce Secretary Howard Lutnick, signs an executive order in the Oval Office on Tuesday. In the order, Trump directed the Commerce Department to open an investigation into potential tariffs for copper imports. Alex Wong/Getty Images hide caption
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Alex Wong/Getty Images
There's an echo here of "infrastructure week" — a phrase that became a joke during Trump's first term, referring to big repeated policy declarations with little follow-through.
Scott Lincicome, a trade expert at the libertarian Cato Institute, thinks the analogy broadly applies — with one big caveat.
"We shouldn't dismiss the real costs that this is inflicting on various companies in the economy more broadly," he said.
Tariffs can hurt consumers by raising prices. But even when tariffs are merely threatened, the resulting uncertainty can drag on business investment. A manufacturer might hold off on buying steel and aluminum until it knows what the tariff policy will be.
Indeed, in a 2020 study, economists at the Federal Reserve found that trade policy uncertainty during Trump's first term significantly cut investment.
Trump's executive orders make the threats more formal
But there are differences between now and eight years ago, Lincicome said — most notably, that Trump appears more willing to act on his tariff threats.
"In Trump 1.0, you just got a tweet that said, 'Oh, I'm gonna slap tariffs on stuff.' We didn't actually get a signed executive order with a deadline," he said. "This is much more formal, and I think that has significant economic implications."
But it's still not clear when Trump is or isn't willing to back down. He has, for example, signed an order to expand steel and aluminum tariffs. Trump initially said there would be no exemptions for any country. However, countries are still pushing for exemptions, and this week, Trump officials and Australian officials met as Australia seeks its own exemption.
Conflicting goals add to the uncertainty
There's another thing adding to the uncertainty: With some tariffs, it's unclear what Trump's goals are.
Chad Bown, a trade expert at the Peterson Institute for International Economics and an economist in the Biden administration, points to Trump's reciprocal tariff idea. Trump has said those tariffs are about fairness, but Bown sees that rationale as confusing.
"This is one argument that he's put forward, but it's one of many arguments that President Trump has put forward on the reasons why he might be using tariffs, and many of them are inconsistent with each other," Bown said.
This means that it can be hard to game out what might cause Trump to go through with — or back down from — some of his threats.
It's not just economists taking Trump's tariff threats with several grains of salt. Markets are also assuming policy won't match Trump's grandest pronouncements.
"We think that the market's certainly looking at it probabilistically," said Mike Reynolds, vice president of investment strategy at wealth management firm Glenmede. "We think that sort of the median likelihood, straight down the middle, is that [tariffs] will end up somewhere that's in between current policy and proposed policy."
The effects of tariff threats go beyond businesses and investors. This month, consumer confidence suffered its largest drop since 2021, fueled in part by fears that tariffs will stoke inflation.
