The Biden administration’s economic strategy has taken another turn as President Donald Trump suggested that tariffs on imports from Mexico and Canada “could go up.”
In a recent interview, he declined to predict whether the United States would experience a recession in 2025, describing the current situation as a “period of transition.”
With new reciprocal tariffs set to begin in April, Trump’s stance on trade has sparked uncertainty. As businesses and policymakers react, concerns over economic stability continue to mount.
Trump’s Shifting Tariff Policies and Economic Justifications
President Trump has made tariffs a central part of his economic approach, particularly toward Mexico and Canada. Initially, the administration announced 25% tariffs on key imports, delaying their implementation before modifying the decision again.
The latest shift came after Trump announced that most tariffs under the US-Mexico-Canada Agreement (USMCA) would be delayed until April 2, with further increases possible.
Trump defended his decision, stating, “It’s a transition into April, and after that, I’m not doing this again.” He suggested that automakers were given a one-time extension and insisted that the tariffs were necessary to protect American industries.
However, on Friday, he indicated that Canadian lumber and dairy products could face new tariffs as soon as Monday.
The shifting policies have drawn mixed reactions. Mexico’s President Claudia Sheinbaum opted to hold off on retaliatory tariffs, while Canadian Prime Minister Justin Trudeau announced that Canada’s countermeasures would remain in place.
Trudeau warned that the policy changes could lead to a prolonged trade war between the two countries.
Commerce Secretary Howard Lutnick confirmed that 25% tariffs on steel and aluminum imports from Canada and Mexico would take effect on Wednesday, while additional tariffs on dairy and lumber would begin in April.
Lutnick also suggested that these tariffs would remain until Trump was satisfied with efforts to curb fentanyl smuggling. National Economic Council Director Kevin Hassett echoed this sentiment, stating that the measures were part of a “drug war, not a trade war,” although Canada accounts for only 0.2% of fentanyl imports to the U.S.
Despite concerns over the economic impact, Trump remains firm in his position. He reiterated that the U.S. would impose reciprocal tariffs against any country that imposes tariffs on American goods, saying, “April 2, it becomes all reciprocal. What they charge us, we charge them.”
Recession Concerns Amid Market Volatility
Trump’s tariff policies have led to market instability, raising concerns about a potential recession. The stock market experienced its worst week in six months, while the crypto market went tumbling down, wth Bitcoin going below $85,000.
Economists warn that prolonged uncertainty could lead to a downturn in consumer confidence and economic growth.
When asked if he anticipated a recession in 2025, Trump avoided making a prediction. “I hate to predict things like that,” he said. “There is a period of transition because what we are doing is very big.” He reassured that the changes would ultimately benefit the economy, particularly for farmers and manufacturers.
Despite Trump’s optimism, economic indicators suggest a growing risk of recession. The Conference Board’s latest survey revealed that consumer expectations of a recession have reached a nine-month high.
Mark Zandi, chief economist at Moody’s, stated that if consumer confidence continues to fall, economic contraction may be inevitable.
China has also responded to the U.S. tariffs by implementing new levies on American agricultural exports, including chicken, beef, pork, wheat, and soybeans. These new tariffs, ranging from 10% to 15%, add further pressure on U.S. farmers, many of whom rely on exports to China.
Lutnick downplayed the risks, arguing that “foreign goods may get a little more expensive, but American goods are going to get cheaper.” However, trade experts caution that tariffs generally lead to higher prices for consumers while disrupting global supply chains.
Former U.S. Commerce Department official Frank Lavin suggested that while tariffs may ease over time, they will continue to be a burden on the economy.
Conclusion
Trump’s latest statements on tariffs indicate that economic uncertainty is likely to persist. With the possibility of further increases on imports from Mexico and Canada, businesses remain uncertain about the long-term impact of these policies.
While the administration insists the economy is undergoing a necessary transition, concerns over a potential recession continue to grow. Whether the tariffs ultimately strengthen U.S. industries or lead to further instability remains to be seen.