How tariffs could affect prices
Tariffs raise the cost of doing business outside the United States. Yet even firms that manufacture in the United States can be affected, since many rely on foreign parts and materials as intermediate goods.
Whether consumers ultimately feel the impact of those higher costs can vary by industry and product.
Lots of negotiation occurs among a U.S. importer, an overseas producer and any middlemen before a tariff is collected, said Craig Fuller, CEO of FreightWaves, a supply-chain consultancy.
Some companies, including Target, Best Buy and Hyundai, have said they would pass some of the higher costs of the tariffs along to their customers. Walmart, meanwhile, has sought to pressure its Chinese suppliers to lower their costs in anticipation of the tariffs — and has been met with resistance.
Other companies, especially luxury-goods sellers, charge enormous markups on goods they import into the United States and may ultimately decide they can live with hits to already-high profit margins, Fuller said. Other firms that enjoy large market shares will also decide whether they will absorb higher costs to maintain their dominant positions.
Even for companies that absorb the cost of the tariffs and don’t raise prices, there will still be a cost. Those companies will have less money to invest in growing their businesses, which can have a negative impact on the labor market if it leads to laying off workers or not adding jobs.
Trump has downplayed any impact tariffs would have on prices. Asked about foreign automakers’ raising the price of their vehicles after he announced a 25% tariff on auto imports, Trump said: “I couldn’t care less. I hope they raise their prices, because if they do, people are going to buy American-made cars. We have plenty.”
Trump's tariff threats have helped erase stock gains
After an initial burst higher in the wake of Trump's election in November, stocks have shifted acutely downward as investors began to digest that Trump was planning to make good on significantly increasing trade duties.
It represents a stark contrast to the gains usually enjoyed by presidents shortly after taking office — including the ones Trump himself saw during his first term.
This time around, Trump has indicated he is less concerned about short-term market moves.
“If you look at China, they have a 100-year perspective," Trump told Fox News last month. "We have a quarter. We go by quarters.”
Trump auto tariffs threaten the 'Detroit of Europe'
Slovakia, the landlocked country east of Austria, could suffer the most from the new auto tariffs that Trump said will take effect Thursday.
“Germany’s car industry is in the eye of the storm and by far most exposed in terms of value, with major players like Volkswagen, BMW, Mercedes, and Porsche likely getting hit by tariffs,” economists Inga Fechner and Rico Luman of Dutch bank ING said in a recent research note.
“But Slovakia — home to several car plants — is most exposed in terms of total US export volume,” they said.
The nation of 5.4 million people produces more cars per capita than any other country in the world. And the “Detroit of Europe” relies heavily on U.S. trade, with autos comprising a major chunk of its U.S. exports.
Blue-collar workers to be guests at Rose Garden announcement
The guest list for Trump's Rose Garden tariffs announcement today will include “steel workers, autoworkers, oil and gas workers, steam fitters, truck drivers, and hardworking Americans from a variety of trades,” according to a senior White House official.
Consumers brace for economic impact of Trump’s reciprocal tariffs
Consumer sentiment has dipped as people brace for possible price increases due to Trump's tariffs.
Sen. Welch: Trump’s tariffs reflect "abdication by Congress"
Sen. Peter Welch, D-Vt., said the tariff disagreements between Trump and Democrats go beyond typical party differences, calling it a “very, very serious situation.”
“We believe what President Trump is doing is, in many cases, lawless and really beyond any norms,” he said on CNBC's Squawk Box.
Welch believes Congress has tariff authority that can be traced back to the Constitution.
Trump’s actions are an “overreach” in service of a personal agenda, he said.
“There’s a real abdication by Congress of its own authority.”
Why Trump says he is putting tariffs in place
Trump and his top officials have given a variety of reasons and mixed messages for their plans to ratchet up the tariffs charged on goods coming into the country.
In Trump’s early weeks in office, he said he was using tariffs on Canada, Mexico and China to punish them for not doing more to stop the flow of fentanyl into the United States. Trump has also used tariffs as a negotiating tool to get concessions out of countries, like threatening Colombia with a tariff if it didn’t accept deportation flights of its citizens.
Trump has said the most recent tariffs are a form of retaliation against countries that put their own tariffs on U.S. goods. He has said the so-called retaliatory tariffs will give companies incentives to move manufacturing to the United States by punishing companies that produce their products overseas. He has also said tariffs are a way to raise revenue for the federal government and suggested tariffs could replace income taxes.
“I think it’s going to be something that’s going to bring a lot of wealth back to our country,” Trump said Monday.
How tariffs work
Tariffs are fees U.S.-based companies pay the federal government when they import affected products into the United States. Since the money is collected by the government, it is considered a tax.
If a big-box retailer, for instance, is importing sneakers from China, it must pay a tariff to Customs and Border Protection officials at a port of entry before it can bring the shoes into the country to sell at its American stores. The same process applies to a manufacturer bringing in parts or raw materials to make a finished product at a U.S. plant or a food distributor importing fresh produce to sell to U.S. grocery stores.
The tariff is calculated as a percentage of the declared value of the good before it entered the United States, not its retail value. The money collected from tariffs goes to the Treasury Department, similar to tax revenue.
Ontario's premier: Commerce secretary said he wasn't sure what to expect today
Ontario Premier Doug Ford, speaking this morning on CNBC, said he recently spoke to U.S. Secretary of Commerce Howard Lutnick about Trump's looming tariffs.
"I spoke to him the other night and asked him, 'What are we expecting April 2?' and he said he wasn't sure," Ford said on CNBC. "Now I don't know if he was blowing smoke or he really didn't know what to expect. Maybe it's the latter."
Ford said the U.S. and Canada needed to "get rid of these tariffs and focus on our real enemies around the world."
Bond yields drop as investors expect slower growth due to tariffs
The yield on the 10-year Treasury bond dropped to as low as 4.13% today as investors looked to safer assets ahead of the tariffs announcement.
Traders increase demand for bonds when they believe growth will slow — and analysts are increasingly warning that Trump's tariffs will reduce economic output in the short term. When bond demand increases, yields drop.
Yields represent the annualized percentage payoff a trader can expect from owning the bond. The 10-year yield is closely watched because it serves as a benchmark for demand for other fixed-income assets in the rest of the economy. For instance, mortgage rates are closely tied to the 10-year yield.
Trump has been looking to bring the 10-year yield down to make it cheaper for businesses and consumers to borrow. Until recently, that's been difficult to accomplish, as fears about stickier inflation — something tariffs would compound — have kept yields elevated.