If you thought President Donald Trump was finished putting together his trade agenda, then you may not follow him on Truth Social or watch his lengthy press conferences. The president, taking to social media, announced a trio of new tariffs, adding to his comprehensive trade agenda. But will it matter much to the world’s largest economy? He undoubtedly believes so.
New Tariffs Coming
In a September 25 Truth Social post, President Trump announced he will implement a series of new tariffs targeting three completely different types of products.
First, Trump plans to impose a 25% levy on heavy-duty trucks manufactured outside the United States, which is in addition to the current tariff regime on automobiles and car parts imported from foreign markets. “Therefore, our Great Large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks, and others, will be protected from the onslaught of outside interruptions,” the president stated.
Second, he will introduce a 50% import duty on kitchen cabinets, bathroom vanities, and associated goods, as well as a 30% levy on upholstered furniture. "The reason for this is the large scale 'FLOODING' of these products into the United States by other outside Countries," Trump wrote. "It is a very unfair practice, but we must protect, for National Security and other reasons, our Manufacturing process."
Finally, his administration will institute a 100% tariff "on any branded or patented Pharmaceutical Product." However, the president will include exemptions for companies building their pharmaceutical manufacturing plants, which, according to Trump, is defined as "breaking ground" or "under construction."
The latest tariff rates will go into effect on October 1.
Tariff Revenues for Farmers
What’s old is new again.
This year, US farmers have struggled as low crop prices and a lack of Chinese buying have decimated the agriculture industry. But President Trump could be coming to their rescue.
At a September 25 White House event, the president suggested he would use tariff revenues to provide assistance to American farmers until his import levies start to yield positive results for the US farm economy. Here is what he told reporters during a signing ceremony at the Oval Office:
“We’re going to take some of that tariff money that we made, we’re going to give it to our farmers who are, for a little while, going to be hurt until … the tariffs kick in to their benefit. We’re going to make sure that our farmers are in great shape, because we’re taking in a lot of money.
“Ultimately, the farmers are going to be making a fortune. But it’s a process—it has to kick in. I want to, in fact, just get the word out to the farmer, because they’ll be struggling until the transition is complete. Then after that, they’re going to do, I think, better than they’ve ever done before."
The United States has collected a record amount of tariff income this year. According to the Daily Treasury Statement, the federal government has generated more than $210 billion in the current fiscal year. Washington is presently on track to collect approximately $300 billion by the end of December.
Similar aid occurred in Trump’s first term when he was engaged in a trade war with China, the world’s largest soybean customer. He allocated about $28 billion to US farmers between 2018 and 2019, distributed through the Commodity Credit Corporation. While Washington and Beijing ironed out a Phase One trade agreement, experts say that China failed to live up to the provisions of the deal, mainly by bolstering its purchases of US soybeans.
What Jerome Powell Is Saying
Federal Reserve Chair Jerome Powell spoke before an audience of business leaders in Rhode Island at a September 23 event. The headline coming out of his prepared remarks and follow-up question-and-answer session was that a jobs slowdown was the chief reason for this month’s quarter-point interest rate cut. However, he also discussed tariffs and their impact on inflation.
As usual, depending on your side of the aisle, Powell either said the president’s trade pursuits were crippling the American economy or that they were doing very little harm to the country.
But the two biggest takeaways from the central bank chief? First, the Fed’s base case is that tariffs will cause a one-time price adjustment over the next 12 months. Second, companies situated between exporters and consumers have, so far, refrained from passing costs onto shoppers.
While data have recently pointed to building price pressures, the tariffying levies have not resulted in a substantial effect on aggregate inflation levels. But there is still plenty of time.
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