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President Donald Trump says he won’t back down from his controversial trade policies, even as Wall Street predicts greater economic pain as a result.
“To the many investors coming into the United States and investing massive amounts of money, my policies will never change,” Trump said in a fully capitalized Friday morning social media post. “This is a great time to get rich, richer than ever before!!!”
His comments come after analysts at J.P. Morgan (JPM-0.22%) raised their risk of a recession to 60% from an earlier forecast of 40%, based on the president’s trade policies becoming “decisively less business-friendly” than expected.
The Trump administration has set “reciprocal” tariff rates at about half of what it says other countries levy on American imports and imposed a 10% base tariff on almost all nations. After all the tariffs take effect next week, importers, who are responsible for the levies, will pay much more for most goods.
Some major U.S. trade partners have been hit with tariff rates far above the 10% minimum. China, which has announced 34% retaliatory tariffs and added more U.S. companies to its “unreliable entities” list, is facing tariffs of 54% altogether, while Vietnam has been hit with a 46% rate.
The baseline 10% tariff on all countries will go into effect Saturday at 12:01 a.m. ET; the reciprocal levies are scheduled for enactment on April 9 at 12:01 a.m. ET. New 25% tariffs on foreign vehicle imports went into effect Thursday morning, while tariffs on vehicle parts will be added by early May. Other levies, such as those on Mexico and Canada, have been excluded — for now — from the reciprocal duties.
J.P. Morgan estimates that the average U.S. tax rate has been raised to 24% and the equivalent of about 2.4% of gross domestic product, making it the largest tax hike since World War II. “These policies, if sustained, would likely push the U.S. and possibly global economy into recession this year,” the analysts said.
Futures linked to the S&P 500, Nasdaq 100, and Dow Jones Industrial Average are all in the red Friday, following declines Thursday. Nasdaq 100 Futures are down by more than 13% year-to-date, while S&P 500 Futures are down by more than 10%.
While Trump says his policies won’t change, he has said he would be willing to negotiate down tariff rates if other countries slash their trade barriers. Commerce Secretary Howard Lutnick said on Thursday that all major countries are in communication with the White House. However, Lutnick said Thursday that exemptions aren’t on the table.
“I don’t think the word ‘exemption’ is going to be a factor. I don’t think that’s such a thing,” Lutnick said in an interview with CNBC (CMCSA-2.70%). “Let’s go try to figure out ways for the world to treat us more fairly and more properly. I don’t think it’s effective for the world to retaliate. I mean, those things are silly.”
However, retaliation is likely to come, with some countries already announcing their plans. Beyond China’s already announced measures, European leaders have condemned the tariffs and are preparing countermeasures. Canadian Prime Minister Mark Carney has announced 25% duties on U.S. cars and trucks, but exempted auto parts.