U.S. stocks have been dropping more each day – including more than 600 points with the Dow Jones Monday -- since the President announced his tariff plan last Wednesday.
China was quick to respond with a 34% retaliation tariff against all U.S. imports.
The White House has said that tariffs work, citing a 2024 study by the Coalition for a Prosperous America. It found that tariffs enacted during Trump’s first term led to a “strengthened” U.S. economy and to “significant reshoring” in industries like manufacturing and steel.
Historically, markets rebound. That won’t change with Trump’s tariffs plan, Secretary of State Marco Rubio said Friday following a NATO foreign ministers meeting in Brussels.
“I don't think it's fair to say economies are crashing, markets are crashing, because markets are based on the stock value of companies who today are embedded in modes of production that are bad for the United States. We need to get back to a time where we're a country that can make things, and to do that, we have to reset the global order of trade,” Rubio said.
Still, the short-term pain is real. It’s abstract and is more easily understood through personal stories like the one business owner Kristin Rae, a producer of luggage, shared on the Taxpayers Protection Alliance podcast last week.
During Trump tariffs in 2017, Rae said her company was forced to temporarily close while she secured U.S.-based suppliers.
“It took years to find adequate suppliers here in the states. It takes time to turn the ship.”
The long-term benefit for all Americans offsets the short-term pain for others, Rep. Randy Weber (R-Texas) told show host Jody Hice.
“We are trying to get back in the saddle, back in control again of our economy. For generations, countries have taken advantage of the United States by raising their tariff rates,” he said.
Weber singled out trade deficits with European Union and India.
The EU and India example
Cars, petroleum, broadcast equipment, computers and motor vehicle parts are among the U.S. imports from the EU.
For India, the list includes pharmaceuticals, gems and jewelry, machinery, organic chemicals and cotton.
The U.S. imported $605.8 billion in goods from the EU last year, $91.23 billion from India.
But the playing field is far from fair, Weber said.
“Right now, we, the United States, impose a 2.5% tariff on passenger vehicle imports with internal combustion engines," he advised. "The European Union and India impose 10% and 70% respectively higher imports duties on the same product. That trade imbalance has been going on for way too long.”
Will tariffs clear up the imbalance?
Trump took a sort of modified victory lap over the weekend when he told reporters on Air Force One that world leaders – 50 has been the reported figure – have reached out to him “dying to make a deal.”
In Trump’s mind, the quick responses from world leaders represent the first steps to financial recovery from massive trade deficits.
“We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the USA. The surplus with these countries has grown during the “Presidency” of Sleepy Joe Biden. We are going to reverse it and reverse it QUICKLY. Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!” he wrote on Truth Social Sunday.
China’s 34% tariff is expected to take effect against the U.S. on Thursday. It is expected to increase the price of household items in the U.S. while at the same time driving down U.S. demand for Chinese goods.
Leah Fahy, a China economist at Capital Economics, called China’s response “significant escalation” in a trade war with global implications.
Trade between the U.S. and China is estimated at roughly half a trillion dollars, according to CNN.
China on Friday placed 11 American companies on its “unreliable entity list” and put “export controls” on 16 American companies to prohibit export of Chinese dual-use items, CNN reported.
Trump gives China a Tuesday deadline
Trump fired back on Monday, giving China 24 hours to withdraw its 34% increase or face 50% tariffs from the U.S. beginning Wednesday.
“Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately,” Trump wrote on Truth Social.
His book "The Art of the Deal" makes Trump's negotiating tactics easy to find. He "pushes as hard as he can then he can always back off and negotiate when dealing with countries,” Weber said. “China is going to do everything they can to try to discourage us. Americans have got to hang on. The market went down, but we’re going to come back up.
“He’s on the right path, and we should be 110% behind him," Weber insisted.
