Donald Trump will be muscular in acting on tariffs, but also flexible.
This is the take-out from his plan to make the imposition of tariffs on Mexico, Canada and China the first item of business on day one of his second presidential term.
Imposing tariffs on America’s three biggest trading partners on day one achieves two things. First, it shows Trump is serious about using tariffs. Any notion that he was all talk and empty rhetoric on trade policy must be swiftly put to bed.
Second, Trump is keeping the rest of the world guessing about how broadly they will eventually be applied.
His day one proposal still falls well short of his radical promise for an across-the-board 10-20 per cent tariff and a 60 per cent tariff on Chinese goods.
Trump is showing he means business while keeping his ultimate plans hidden – creating space for future flexibility.
Posting on his Truth Social platform, Trump said Canada and Mexico would be hit with a 25 per cent tariff on all goods coming into the US “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country.”
Trump also said he would charge Beijing an extra “10 per cent tariff, above any additional tariffs” on all Chinese products coming into America until the flow of illegal drugs into the US was halted.
Economist Steven Hamilton said the Trump tariffs would be “strongly inflationary in the short run and economically damaging in the long run”, given the strong cross-border trade for North American production inputs.
He also said there was good news from Trump’s day one plans, including for Australia.
“This is confirmation of something we have wondered for some time now – the tariffs are not intended to be an across-the-board, unconditional move to raise revenue but rather are a bargaining chip in order to extract concessions from other countries, just as they were last time,” Mr Hamilton said.
“If the countries do as he asks (or at least appear to make a good-faith effort to do so), then perhaps there will be no tariffs.
“This is, in particular, very good news for Australia, as the probability of across-the-board tariffs, which would harm Australia, just went down.”
If Trump does intend to use tariffs as a bargaining chip, this raises further questions.
Would Trump seek to bargain with Canberra and what would he ask in return for Australia being carved-out of any punitive trade measures?
Nobody knows the answers to these questions, reinforcing the unpredictability of the new Trumpian era.
“We are operating under a lot of uncertainty, and have been waiting for Trump to resolve that uncertainty,” Hamilton said.
“We have to take it step by step.
“But there are many things one might have expected him to do on tariffs on day one.
“This is far, far better than what we would have expected had we taken him (Trump) literally.”
Immigration detention duty: minister Burke powers up
Immigration Minister Tony Burke has quietly issued new rules granting himself the power to impose electronic monitoring and curfews on dangerous non-citizens released from detention.
$42k taxpayer grant for anti-Israel artist
Matt Chun received a $42,452 taxpayer grant in May 2023 to publish a picture book. He previously co-wrote works that attacked ‘colonial and imperialist’ statues.