Connect with us

News

Why Trump’s tariffs won’t last long

Published

on

Why Trump’s tariffs won’t last long

This article is an on-site version of Free Lunch newsletter. Premium subscribers can sign up here to get the newsletter delivered every Thursday and Sunday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters

Welcome back. Two weeks ago, I outlined five optimistic scenarios for the global economy. The first was “Donald Trump dilutes his tariff plans”. Now that the US president has unveiled his historic package of import duties, I return to this idea. This week, I sought the argument for why US tariff rates won’t stay high for long. Here’s what I found.

First, the economic pain. In the near term, most forecasters expect Trump’s import duties to raise prices and slow economic activity. But the White House may have overestimated its ability to withstand political pressure as tariffs kick in.

Consumer sentiment is falling in anticipation of bad times ahead. But as the latest tariffs actually hit supply chains, it will plummet.

Some content could not load. Check your internet connection or browser settings.

Advertisement

Durable goods and non durable items, such as food and clothing, account for 30 per cent of US household spending. These will, to varying degrees, be hit by higher duties. (One estimate suggests the price of an iPhone 16 Pro Max could jump from $1,599 to $2,300, if all tariff costs are passed on to consumers.)

Trump’s pre-April 2 tariffs were already pushing up manufacturers’ prices. Given the extent and scale of his latest blitz, inflation could rise higher and faster than anticipated. Blanket tariffs limit the ability of US suppliers to find cheaper alternatives quickly. Overall, Allianz Research expects around two-thirds of companies to pass on costs to consumers.

The non-price effects of Trump’s agenda are also piling up: so-called Department of Government Efficiency-linked lay-off announcements totalled more than 280,000 over the past two months, while existing tariffs and uncertainty are restraining hiring and investment plans.

Some content could not load. Check your internet connection or browser settings.

This builds on economic concerns before Trump came in. A reminder: prices have risen 20 per cent on average since the start of January 2021 (with the cheapest goods facing even higher inflation), and debt distress is rising in Republican states (which could be exacerbated if the US Federal Reserve keeps rates higher for longer to ward off tariff-linked inflation spirals). In all, Americans’ threshold for quick, further pain is lower than the president thinks.

The targeted approach trade partners are taking in their retaliation will worsen this. For instance, the EU is devising levies aimed at Republican-held states — including soyabeans in Louisiana, beef in Kansas and produce in Alabama — in response to Trump’s steel and aluminium tariffs.

Advertisement

Some content could not load. Check your internet connection or browser settings.

This matters because approval ratings track consumer sentiment closely, particularly for Republicans when Trump is in power. And political concerns were rising within the GOP even before the president’s “reciprocal” tariffs.

Data collated from YouGov by John Burn-Murdoch in the FT shows Trump’s economic approval among his non-Maga 2024 voters rapidly falling. Broader Republican consumer sentiment is now also at a turning point.

Since Trump unveiled his latest tariffs, discontent has spread. In the Senate, a largely symbolic resolution to overturn the tariffs against Canada was passed with Republican support on Wednesday. Later in the week, the FT reported a rift emerging between top Republicans on trade policy. GOP senator Ted Cruz (usually a staunch Trump supporter) also warned of a potential “bloodbath” for the Republicans at the November 2026 midterm elections.

Some content could not load. Check your internet connection or browser settings.

Businesses may also become more vocal, at least in private, notes Marko Papic, chief strategist at BCA Research. “Existing US corporations — which employ Americans at a greater level than some theoretical manufacturing renaissance would — are going to face steep costs, and will lose business in foreign markets.”

Major S&P 500 tech, banking and industrial stocks have plunged. Apple experienced its biggest ever one-day valuation wipeout. The tech bros and big business networks will put pressure on contacts in the administration, and senior officials’ stock portfolios will suffer.

Advertisement

Small business owners, who employ almost half of the private sector workforce and are an important Republican constituent, are now also feeling less optimistic. Plans to end “de minimis” customs exemptions globally would be particularly painful for them.

Some content could not load. Check your internet connection or browser settings.

In financial markets, it will take something spectacular to shift Trump, given his flippancy about plunging stock prices so far.

“It’s a bit like asking a pyromaniac to put out a fire he started,” said Jonas Goltermann, deputy chief markets economist at Capital Economics. “There is a degree of pain, whether in equities or other markets, that would prompt some sort of a rethink. But it is further away than most thought.”

Could bond markets force him to change course? Right now US Treasury yields are falling, as investors still consider them safe haven assets. But in one tail-risk scenario, fiscal recklessness (for example, stimulus measures amid unreliable tariff revenue, Doge savings or growth projections), a rising term premium (given Trump’s unpredictability) and higher inflation or interest rate expectations (if high prices become entrenched) could fuel a sell-off event. “In that case, presumably [Scott] Bessent would have to try convince Trump that his approach is not tenable,” said Goltermann.

Some content could not load. Check your internet connection or browser settings.

Advertisement

Either way, the cumulative pressure from households, business, markets and Republicans on Trump will mount even faster now tariffs are in full flow. Delays, exemptions and reductions are possible.

Could the administration soften the blow by expediting tax-cutting measures? Garrett Watson, director of policy analysis at the Tax Foundation, is sceptical. He said plans to extend existing tax cuts may not be considered a gain by households. Nor would they cancel out the income hit from tariffs.

Watson added that the administration’s plans for additional tax cuts might help. But the $2.9tn Trump’s tariffs are estimated to raise will not even offset the extension of the expiring tax cuts. (Plus, tariff revenues are difficult to forecast.) “Timing is also a challenge, the negative impacts of the tariffs accrue now, while the tax package will take further time to pass and even longer to see bottom-line benefits.”

Even if we assume the president can brush aside the political pressure, there are other ways tariffs could come down.

Interim shortages might lead to some limited tariff reductions. “Any price spikes from tariff hikes in totemic items may trigger emergency moves to lower prices, doing that quickly almost always involves opening up to imports,” said Simon Evenett, professor at the IMD Business School, who points out that the administration is, ironically, trying to deal with the current egg shortage in part via trade.

Next, a partial rollback could be plausible if trade partners offer him sufficient concessions. Indeed, Trump has already shown a willingness to negotiate. Allianz Research’s baseline scenario is for several bilateral deals by the end of this year to reduce the US effective tariff rate by about 40 per cent.

Advertisement

Some content could not load. Check your internet connection or browser settings.

Then there’s the bigger picture. Trump hopes foreign investors will set up factories in America to avoid tariffs. Given the time and cost involved, a swift job and investment spurt that offsets domestic economic pain is unlikely. Global manufacturers don’t know how long tariffs will last, don’t like uncertainty and need reliable supply chains (domestic or international).

But the transition to America becoming a self-sufficient manufacturing hub is a costlier, more protracted and less desirable process than Trump thinks it is. The global goods industry is more interconnected and complex than it was in the late 19th century when the US had high tariffs for an extensive period. The opportunity cost of being behind a protectionist wall is far greater today (see last week’s newsletter).

International factory owners know this. Most could decide to sit it out, which would raise pressure on Trump. That also means US manufacturing is unlikely to grow to the point where reducing tariffs in the future is harder, as established, coddled industries tend to lobby to keep them.

Some content could not load. Check your internet connection or browser settings.

Sure, levies could even go higher in the near term. But between the rapidly rising economic pain, political pressure and the president’s fondness for negotiations, there is perhaps a greater chance of tariffs coming down sooner than feared.

“He will certainly pay a political price if there is nothing to show at the end of all this chaos. And that is a real possibility,” said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics.

Advertisement

Indeed, even if Trump doesn’t bow to the pressure in his term, it’s hard to see how any subsequent administration could then justify keeping his levies in place.

How long do you think Trump’s tariffs will last? Send your thoughts to freelunch@ft.com or on X @tejparikh90.

Food for thought

After remaining constant for over three decades, productivity at US restaurants surged during the pandemic and has remained high. Why? A new NBER working paper suggests the rise of takeaway culture, aided by food-delivery apps, is the secret sauce.

Recommended newsletters for you

Trade Secrets — A must-read on the changing face of international trade and globalisation. Sign up here

Unhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here

Advertisement

News

Three more people charged with damaging Reflecting Pool after Trump’s multimillion-dollar restoration | CNN Politics

Published

on

Three more people charged with damaging Reflecting Pool after Trump’s multimillion-dollar restoration | CNN Politics

Three more people have been criminally charged with destruction of property at the Lincoln Memorial Reflecting Pool.

Officers say they detained Cameron Thiers, Sophie Dennison-Gibby and Justin Carreno one Saturday afternoon in June and described in court documents witnessing them peeling and removing pieces of blue paint from the Reflecting Pool.

One officer “witnessed Carreno reach down into the reflecting pool and pull up a piece of the blue paint,” according to the court documents.

The officer who detained Dennison-Gibby “found 1 additional piece of the reflecting pool liner” in her purse, the documents said.

All three incidents were recorded on the officers’ body worn cameras, they said in the court documents.

Advertisement

Several “partnering law enforcement agencies assigned to the Reflecting Pool” working with US Park Police were involved in detaining the two men and one woman — including officers from Texas, Oklahoma, Montana and California.

One of the officers said in court documents that Thiers “admitted to removing a piece of blue sealant from the Reflecting Pool and still had it in his hand when I made contact with him.”

The three defendants were arraigned in court Wednesday and pleaded not guilty to the misdemeanor charges of destruction of property with a value less than $1,000. The judge ordered them to stay away from the Reflecting Pool.

Lawyers for Thiers and Dennison-Gibby declined to comment. CNN has reached out to Carreno’s attorney.

If found guilty of destruction of property, the defendants could be fined up to $1,000 and face a maximum of 180 days behind bars.

Advertisement

The New York Times first reported that three additional people had been charged with damaging the Reflecting Pool.

President Donald Trump has repeatedly claimed that vandals caused major damage to the pool by gashing the lining after his administration spent more than $14 million on renovations, though he has not provided evidence to support that claim. The officers who charged Carreno, Thiers and Dennison-Gibby did not accuse them of gashing the lining.

Former Olympic canoeist David Hearn was indicted by a grand jury in Washington, DC, last week for allegedly damaging the Reflecting Pool. Hearn — unlike Carreno, Thiers and Dennison-Gibby – was charged with destruction of property with a value of more than $1,000 which carries a maximum penalty of 10 years in prison, if convicted. He is set to be arraigned in court Thursday.

Crews began draining the Reflecting Pool over the weekend to make repairs, according to Interior Secretary Doug Burgum, for the second time in three months.

The move comes after weeks of problems – algae blooms, green-hued water, a chipping bottom and the administration’s allegations of vandalism – that have plagued the iconic landmark, making its woes the subject of national interest.

Advertisement
Continue Reading

News

Supreme Court financial disclosures reveal how their books add to their income

Published

on

Supreme Court financial disclosures reveal how their books add to their income

Supreme Court Justice Amy Coney Barrett speaks at the Reagan Library on Sept. 9, 2025, in Simi Valley, Calif. Barrett discussed and signed copies of her new book, Listening to the Law: Reflections on the Court and Constitution.

Mario Tama/Getty Images


hide caption



toggle caption

Advertisement

Mario Tama/Getty Images

Even as the Supreme Court was handing down one legal thunderbolt after another last week, the justices were quietly releasing their annual financial reports. Justice Samuel Alito was the only sitting justice to request an extension, which he has done for 15 years. The disclosures do not give a complete account of the justices’ total income and wealth, but they give insights into their concertgoing, guest professorships and even their involvement in youth sports.

In addition to their salaries, much of the justices’ reported income came from their book deals. Justice Ketanji Brown Jackson led the pack earning more than $1.1 million last year for a total of roughly $4 million since her memoir, Lovely One, was published in 2024.

Justices Sonia Sotomayor, Neil Gorsuch, Amy Coney Barrett and retired Justice Anthony Kennedy also reported income from published books. Earnings from their books ranged from $849,000 for Barrett, to $300,000 for Gorsuch and $88,000 for Sotomayor, whose books include her 2013 autobiography and five children’s books. Justice Clarence Thomas, who previously earned $1.5 million for his 2007 memoir, listed no publisher payments last year, and Justice Brett Kavanaugh, one of 13 co-authors of a 2016 legal treatise, also received no payments last year. Kavanaugh is said to be working on a memoir but he listed no payments for the anticipated book. Alito does have a book coming out in the fall, but with his financial report still outstanding, there is no data on how much he was paid for the work in 2025.

Advertisement

The only two sitting justices who have not written books are Chief Justice John Roberts and Justice Elena Kagan.

Many justices also earned income from teaching at law schools. Roberts reported income from New England Law, located in Boston, and Gorsuch reported teaching income from George Mason University in Virginia. Thomas taught classes at Catholic University in Washington, D.C., and Barrett and Kavanaugh taught at Notre Dame Law School. Barrett graduated from the school and began teaching there 23 years ago; Kavanaugh has family connections to Notre Dame.

Continue Reading

News

Manhattan Building’s Columns Buckled Beneath New Addition, Images Show

Published

on

Manhattan Building’s Columns Buckled Beneath New Addition, Images Show

At least two structural columns buckled and failed in a 37-story office tower in Midtown Manhattan on Tuesday, prompting evacuations of nearby streets and buildings. While city officials asserted that the tower was in no danger of collapsing completely, outside engineers said further failures in the structure could not be ruled out.

A pair of columns that failed completely were part of the tower’s existing structure. A New York Times review of images and videos from inside the building has found that several floors were added atop these columns.

Advertisement

City officials said in a news conference on Tuesday that the building was continuing to move, while they simultaneously assured the city that the building would not suffer “total collapse.” “The way this building is constructed, it’s a steel-frame building,” John Esposito, a chief in the Fire Department in New York, said at the afternoon news conference. “So, it would not be a total collapse. It would be more of a localized collapse.” Still, he said, “that remains our concern, that it’s moved.”

Advertisement

Engineers said that the movement itself was cause for concern. In a properly designed steel building, they said, loads should redistribute quickly to surviving structural supports if columns failed.

Joe DiPompeo, a former president of the Structural Engineering Institute at the American Society of Civil Engineers, said that if the structure had been overloaded, he would expect any movement “to happen very quickly,” rather than gradually.

“Generally when a column buckles, it’s a sudden failure,” Mr. DiPompeo said. He said that a full collapse remained unlikely given the redundancies built into the building codes.

Advertisement

Engineers often refer to the most dangerous possibility as a progressive collapse, a process in which structures near the initial failure become overstressed and also fail, potentially bringing down the building if the sequence continues. While unlikely, it cannot be ruled out, Mr. DiPompeo said.

Footage recorded from inside the building shows at least two structural columns appear to have failed completely, Mr. DiPompeo said. Other nonstructural, interior walls — or at least the metal “studs” that were in place to hold them up — also appear to have deformed.

Advertisement

“The only way that really happens is if the floor above them dropped. It looks like the floor above could have dropped a foot or two, which is obviously not a good situation,” Mr. DiPompeo said.

@fernando40tiktok.commarc via Storyful

Advertisement

Advertisement

Image from @fernando40tiktok.commarc via Storyful

Advertisement

Image from @Bogs4NY via X

Advertisement

The 37-story building is in the process of being converted from office space into residential units. Four new floors and a large vertical portion were added onto the existing building in recent months. The vertical portion consists of a stack of over a dozen new floors cantilevered out over the existing building below.

Engineers said that there was nothing inherently wrong with adding residential floors or the cantilevered section above the columns that failed, as long as the original structure and the modifications had properly accounted for the added weight and wind loads.

“The cantilever alone doesn’t change anything,” Mr. DiPompeo said, but it does put additional load on the columns underneath — a factor that should have been reflected in the design.

Advertisement

Nathan Berman, managing principal and founder of MetroLoft, the developer overseeing the conversion, said on Tuesday that “this incident is nothing more than a typical construction mishap.”

He said two columns near the northwest corner of the tower had bent under the weight of additions to the building above, most likely because those columns had not been properly reinforced, though he said an investigation would determine the cause. The rest of the columns, he said, “picked up the weight.” He estimated the affected floors above the failed columns had sagged by a maximum of four inches.

Advertisement

Mr. Berman said that he expected the problems to be fixed and the project to be completed with, at most, a slight delay.

On Tuesday evening, installation of temporary shoring was set to begin shortly, in order to help stabilize the 20th and 21st floors of the building.

Advertisement
Continue Reading
Advertisement

Trending