Taking Trumps Tariffs Threats Seriously and Literally

ImageIs Trump bluffing? President Trump’s tariff threats have perplexed and rankled foreign leaders and C.E.O.s for some time now as they fear the unleashing of a tit-for-tat trade war.Investors apparently feel relieved that he has held off so far, with S&P 500 futures gaining this morning.But a growing number of analysts and business leaders fear tariffs are inevitable (more on that below).

There’s one theory gaining traction: Trump sees levies not just as a negotiating tactic, but also as a way to make money.A recap of Trump’s latest threats: Canada and Mexico could face 25 percent tariffs as soon as Feb.1, and China could be hit with a 60 percent levy — or perhaps just 10 percent.“It is tempting” to see Trump’s statements as a signal that he views tariffs as “a transactional tool,” George Saravelos, a foreign-exchange analyst at Deutsche Bank, wrote in a research note on Tuesday.Saravelos added, “But the only explicit reference to tariffs in Trump’s inauguration address was with respect to their use as a strategic revenue tool.”That would most likely be a job for the External Revenue Service, an agency that Trump has proposed creating to collect what he said in his inaugural address would be “massive amounts of money pouring into our Treasury coming from foreign sources.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.

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