Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
U.S. President Donald Trump claims to know “The Art of the Deal,” and he could be applying that know-how to the world of tariffs.
Wall Street is starting to think Trump‘s all talk, no action. He started with his tough tariff agenda by levying duties on Colombia, but then walked back on them when he got concessions over the acceptance of illegal migrants across U.S. borders. The tariffs on Mexico and Canada followed, but he also delayed their implementation by one month. Then came China, where the de minimis exemption was cut off. But within less than a day, shipments under $800 were tariff-free again.
Trump this week promised to implement reciprocal tariffs on countries who are taxing America goods entering their borders. The catch is there’s no hard deadline for starting date, although the expectation is somewhere around April 1 and no later than August.
“The broad scope and long lead time suggest that the plan might have been floated to encourage negotiation with trading partners,” wrote Goldman Sachs economist Alec Phillips in a report on Thursday. He noted that it could take several months to develop a reciprocal trade plan. Phillips added that the “plan can be developed only after” the Department of Commerce, U.S. Trade Representative, and other trade-focused agencies have made other trade policy recommendations to the president on April 1.
“While President Trump has supported a reciprocal plan since his first term and appears serious about equalizing tariff rates, the broad scope is indicative of a maximalist starting position intended to spur concessions from trading partners, while the long lead-time is likely intended to create room for negotiations,” Phillips concluded, adding that during his announcement, “Trump noted that other countries have already offered to lower certain tariffs.”
In a Friday morning podcast, UBS chief economist Paul Donovan described Trump’s reciprocal tariff announcement as a “plan to investigate taxing U.S. consumers at a future date.”
“Markets had to decide whether the president was being a protectionist or a pushover, and for now are erring toward pushover,” Donovan said. “The delay is seen as an opportunity to do ‘deals’. So far, such deals have been more spin than substance.”
TD Cowen’s Washington strategist Chris Krueger noted that the 25-percent tariff on steel and aluminum and the reciprocal tariff announcement, while they did include the expected delayed effective dates, were the “first tariff threats that not come with an ‘ask.’” Earlier tariffs on countries such as Columbia, Mexico and Canada came with demands to prevent illegal migration and stop the flow of fentanyl into the U.S.
Meanwhile, unadjusted retail sales in January rose 4.8 percent from a year ago, including a 1.4-percent gain at department stores and a 3.6-percent spike at apparel and accessories stores.
Credit ratings firm S&P said price increases will be harder to pass along to the consumer because of the inflation cycle and the already weak consumer environment.
“Broad-based tariffs could hurt more U.S. consumer products and retail companies this time around than in 2018, which was more manageable,” concluded Bea Chiem, retail and consumer managing director at S&P Global Ratings.
“Retail sales disappointed estimates but following several strong months of data,” noted ITR economist Lauren Saidel-Baker, who concluded that there is no reason for concern. “Front-running tariffs likely contributed to some amount of retail spending pull forward from early 2025. Other one-off factors, such as severe winter weather and California wildfires, may have suppressed January’s result,” Saidel-Baker said.
Jack Kleinhenz, chief economist for the retail trade group The National Retail Federation, said that even though retail sales slowed in January, the retail sales data points to a “stable economy and provide a solid start to 2025.”
