Trump's Tariff Tightrope: A Looming Trade War?

Money Explainers

3/7/2025

Will Trump's tariff deadline spark a new trade war? Businesses and consumers brace for impact as negotiations stall.
#TradeWarCountdown #TariffTalks #USBusinessImpact

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00:00The specter of a renewed trade war hangs heavy as President Donald Trump's temporary tariff

00:05pause is set to expire. After hinting at an extension, Trump reversed course, declaring

00:12an end to the grace period and informing countries of their new tariff rates. He stated it has been

00:18harder than planned to forge new trade deals, claiming nations are spoiled from having ripped

00:23us off for 30-40 years. This could mean a fresh wave of tariffs, driving up costs for businesses

00:30and prices for consumers. Trump recently announced a trade agreement with Vietnam, imposing a 20%

00:38tariff on Vietnamese goods and 40% on products rooted through Vietnam from other countries.

00:44Tariff uncertainty has led the Fed to delay interest rate cuts, with inflation remaining

00:49above its 2% target. Companies that stocked up on inventory in the spring may see higher

00:55prices for consumers this summer and fall as supplies dwindle. White House officials are

01:01in talks with 18 top trading partners, including the EU, Japan and India. In return, Vietnam will

01:09not levy tariffs on U.S. goods. U.S. imports from Vietnam soared by nearly 20% last year as

01:16companies like C&C shifted production from China to avoid tariffs. Trump also suggested a trade deal

01:23with India was close, after previously threatening a 26% tariff. A deal with Japan, however, seems

01:30unlikely due to a disagreement over rice imports. With Japan already facing a 25% tariff on cars to the

01:38U.S. and a reciprocal 24% if the pause expires. The EU's top trade negotiator is in

01:46Washington, with the EU threatening $100 billion in retaliatory tariffs, if no deal is reached

01:53by July 9th. Uncertainty also looms for smaller trading partners, like Madagascar, the U.S.S.

02:00main vanilla supplier, which faces a 47% tariff. This follows the initial Liberation Day, announcement

02:08in April that saw tariffs of 24% on Japanese imports and 20% on EU products. A move, Trump

02:16said, would end decades of the U.S. being looted, pillaged, raped and plundered. The initial

02:22announcement sent stocks tumbling, wiping out trillions from the S&P 500 and increasing government

02:30borrowing costs as investors fled U.S. assets. Just a week later, Trump paused most tariffs for 90 days,

02:39aiming to broker new deals with up to 75 trading partners. White House officials framed this as an

02:46art-of-the-deal tactic. However, the estimated $80 billion in additional tariff. Revenue collected

02:53pales in comparison to the multi-trillion-dollar market gyrations. Nearly three months later, no major trade

03:01agreements have been finalized. With only a framework reached with the UK with the July 9th deadline fast

03:08approaching. U.S. businesses face hefty levies on overseas goods once again. Tariffs, essentially taxes

03:16on imports, can either reduce company profits or be passed on to consumers as higher prices. Investors

03:23largely anticipate an extension of the deadline, expecting no major tariff spike. J.C. Morgan's

03:30Hussein Malik notes that while tariff fatigue exists, trade policy concerns persist. Some tariffs,

03:38like the blanket 10% on all imports and higher rates on steel, aluminum and autos, remained in place

03:44throughout the pause. The U.S. and China also agreed to a 90-day pause, with the U.S. cutting its

03:51effective rate on Chinese imports. While current tariffs haven't significantly disrupted the economy,

03:58Federal Reserve Chair Jerome Powell warns of potential future effects. Trump touted the Vietnam

04:04agreement as opening up their market to American-made SUVs. Despite the average Vietnamese wage being

04:12around $600 a month. Money expires

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