President Trump is doubling down on his widespread tariffs threats despite a stock market downturn that has helped fuel anxiety the nation could slide into a recession.
Trump escalated the tit for tat with Canada on Tuesday when he said his administration would increase planned steel and aluminum tariffs in response to an electricity surcharge the Ontario government imposed on the U.S.
Trump’s turning of the screws appeared to elicit response — later that day, Ontario Premier Doug Ford backed off from the threat.
Ahead of Ford reversing himself, the White House touted the tariff strategy against Canada as “retaliatory,” arguing Trump is aiming for fair and balanced trade practices to protect American workers. It also blew off the stock market dives over the past two days as “a snapshot” in time.
“Our country had to do this. We had to go and do this,” Trump said, while looking at Tesla cars along with CEO Elon Musk. “Other countries have taken away our business, they’ve taken away our jobs.”
The uncertain economic times come as Trump is set to impose reciprocal tariffs beginning April 2 on all countries with duties on U.S. products after he announced 25 percent tariffs on imports from Canada and Mexico with a one-month exemption for car parts and other goods that fall under the U.S.-Mexico-Canada trade agreement.
Monday marked the worst day for the Dow Jones Industrial Average and S&P since December, when it closed with a loss of 890 points, falling 2.1 percent.
Markets are bracing for another potential hit on Wednesday, when February’s consumer price index report will be released, which will reflect inflation numbers during Trump’s first full month in office. Inflation had cooled under former President Biden, and economists predicted it would continue on that trajectory, but tariffs have brought about a different story.
The White House, however, is unfettered, maintaining on Tuesday that Trump was responding to Canada “ripping off” the U.S. and claiming that retaliatory tariffs up to 50 percent on Canada were necessary after Ford made “an egregious and insulting comment” by threatening to shut down electricity on parts of the country.
“When it comes to the stock market, the numbers that we see today, the numbers we saw yesterday, the numbers we’ll see tomorrow, are a snapshot of a moment in time. And as President Trump has said … we are in a period of economic transition,” White House press secretary Karoline Leavitt said.
She added, “We are in a period of transition from the mess that was created under Joe Biden in the previous administration. Joe Biden left this country in an economic disaster.”
The market sell-off this week also appears to be hitting Trump’s approval rating just six weeks into his term.
A new Emerson College Polling survey found 48 percent of Americans said they disapprove of Trump’s handling of the economy and that his approval rating has dropped a few points, down to 47 percent compared to 49 percent when he first took office.
Some experts questioned Trump’s strategy to insist on tariffs despite the president refusing to back down on them.
“I think you’d be hard pressed to find an economist who would say that the tariffs are great. I mean, all through history, they’ve been a bad idea. And in fact, they’ve been prosperity killers,” said Peter Ricchiuti, a professor of finance at Tulane University
Ricchiuti outlined that companies struggle to make decisions on hiring, expanding or spending when the stock market is in a moment of turmoil, warning that this kind of freeze in activity can lead to a recession.
“All the algorithms and financial structures you would use to make those decisions are all out the window, and so they’re starting to put the brakes on everything, and that’s what will lead to a recession,” he said.
The market tumble came the day after Trump refused to rule out the possibility of a recession during an interview with Fox News on Sunday, saying that he hates “to predict things like that.”
Some GOP lawmakers have also given a tepid response, saying they hope that tariffs would only be deemed necessary temporarily.
Senate Majority Leader John Thune (R-S.D.) said he supports Trump using tariffs to stop the flow of fentanyl into the United States but said the tariffs should be temporary, citing the growing uncertainty that is roiling the financial markets.
“The president, I believe, is trying to accomplish a specific objective here, and that is to halt the flow of fentanyl into this country, and the tariffs are a tool in order to make that happen. And I am supportive of using tariffs in a way to accomplish a specific objective, in this case, ending drug traffic,” Thune told reporters Tuesday when asked about the reverberations Trump’s tariff threats are having on the markets.
Other signs of economic downturn included the February Commerce Department data showing consumers in January slashed their spending by 0.2 percent from December, which was the most since February 2021.
Fox Business Network host Charles Payne said the apparent decline in consumer spending on restaurants, airlines and lodging was “shocking,” arguing that “the boom times are over.”
Trump vowed to lower the prices of goods and gas and railed against inflation during the Biden administration while on the campaign trail, but so far rates appear stagnant.
The White House now insists that Trump inherited a struggling economy from Biden, despite a stable job market and inflation steady at under 3 percent in the last months of the previous administration.
But, the White House hasn’t given a clear response when pressed on how long Americans will have to wait for the economy to improve again given the impacts of Trump’s tariffs on the stock market.
Republicans though are largely sticking with Trump, opting to stay optimistic that his long-term plan is worth the short-term bruising on the economy.
Speaker Mike Johnson (R-La.), when questioned about the tariff strategy, called it “a shake up,” adding “that is what’s required, in my mind, to start the process of repairing and restoring the American economy.”
Alexander Bolton contributed.
