As he proposes ever stiffer tariffs, President Trump has normalized his merely big ones.
There has been a mantra spreading among weary corporate executives who are becoming resigned to President Trump’s tariffs while still hoping to avoid the worst of their effects: Ten percent is the new zero.
The statement refers to the 10 percent tariff that Mr. Trump put in place on most U.S. imports one month ago. Such a significant increase in U.S. tariffs would have been unthinkable a few years ago. But it no longer seems like such a big deal, compared with the truly large tariffs that Mr. Trump has already imposed or threatened elsewhere.
Mr. Trump’s “Liberation Day” announcement on April 2 that he was planning tariffs of 10 percent to 60 percent on dozens of America’s trading partners set off a rout in the bond markets and a flight from the U.S. dollar as investors panicked at the prospect of an economically devastating trade war. Mr. Trump also ratcheted up tariffs on China to a minimum of 145 percent amid a trade spat with Beijing, bringing much of the trade between the countries to a halt.
That turmoil appears to have moderated Mr. Trump’s impulses somewhat. The president quickly paused tariffs on most countries, giving them 90 days to negotiate trade deals instead.
Mr. Trump also granted a lucrative exemption from China tariffs for makers of electronics and offered some limited relief for automakers. And he has hinted that he could do more, saying he likes to be “flexible.”
Investors have lapped up any signs of good news, even insubstantial ones. Stock markets have now regained nearly all of the losses they sustained after April 2, buoyed by comments from Trump administration officials that they are working to close trade deals with allies and looking for an opening to negotiate with China.