What makes it difficult:
The debate has fueled speculation about how aggressive Trump will be given the potential economic risks.
Analysts say the tariffs are likely to lead to higher prices for Americans and pain for companies hit by foreign retaliation.
And unlike in Trump’s first term, any action would come at a delicate time, as the long-term economic expansion in the US appears to be on its last legs.
Even if the toughest tariffs never go into effect, the political debate alone is creating uncertainty that could reduce investment and reduce US growth by 0.6% through mid-2025, according to Oxford Economics.
“They have very limited room for error,” Michael Tsembalest, head of market and investment strategy at JP Morgan Asset Management, said in a recent podcast. He cautioned that the desire for a major overhaul is likely to “break something,” although what remains to be seen remains to be seen.
Trade lawyer Everett Eisenstat, who served as a White House economic adviser during Trump’s first term, said he expected a comprehensive tariff but acknowledged the plan would compete with other goals.
“There is always tension. There is never perfection in the world of politics. And obviously one of the reasons I think he got re-elected is because of the concern about inflation,” he said.
“We’re in a different world (from the first term) and we’ll have to see how it goes,” he said.
