All eyes are on February 1 as Trump renews his threat for universal tariffs. 
Trump Says Tariffs Will Protect the Country
Bloomberg reports Trump Renews Universal Tariff Threat to ‘Protect Our Country’
President Donald Trump said he wants to impose across-the-board tariffs that are “much bigger” than 2.5%, the latest in a string of signals that he’s preparing widespread levies to reshape US supply chains.
“I have it in my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” Trump told reporters Monday night.
Asked about a report that incoming Treasury Secretary Scott Bessent favored starting with a global rate of 2.5%, Trump said he didn’t think Bessent supported that and wouldn’t favor it himself. He said he wanted a rate “much bigger” than 2.5%.
Trump spoke aboard Air Force One while he flew back to Washington from a Florida speech where he pledged tariffs on specific sectors, including semiconductors, pharmaceuticals, steel, copper and aluminum. He also strongly suggested he could also impose them on automobiles from Canada and Mexico, countries he’s already threatened with 25% across-the board tariffs as soon as Feb. 1.
“As tariffs on other countries go up, taxes on American workers and businesses will come down and massive numbers of jobs and factories will come home,” Trump said at a gathering of House Republicans at his Doral resort in Miami, during a speech in which he praised the tariff-heavy US approach at the turn of the 20th century.
“Remember, again, the word ‘tariff.’ We’re going to protect our people and our businesses, and we’re going to protect our country, with tariffs,” Trump added. He’s said to have earlier mused about tariffs of up to 20%.
“If you want to stop paying the taxes or the tariffs you have to build your plant right here in America. That’s what’s going to happen at record levels,” he said.
Trump singled out several sectors in his speech to lawmakers. He complained at length about auto imports both from Canada and Mexico.
“They send us millions of cars; we don’t need them for that,” he said of Canada, America’s top export market. “We want to have the cars made in Detroit or South Carolina or many other locations.” Trump then added: “The auto workers voted for me and I have an obligation to do what’s right, and I’m going to do that.”
He sang the praises of steel tariffs that he implemented in his first term and said he’d be “placing tariffs on steel, aluminum and copper and things that we need for our military,” without elaborating. “We have to bring production back to our country.”
Trump’s Pledge to Raise Prices
The US is already the highest cost producer of cars and steel in the world.
Bringing production here with union contracts would make the US the highest cost producer of everything unless we can automate.
And automation is something neither the unions nor Trump wants.
Auto Parts
Various auto parts and cars cross the border several times.
It will be interesting to see how that works out.
Trade Surplus With Canada Excluding Energy
For all of Trump’s pissing and moaning, the US has a trade surplus with Canada excluding energy.
Just Do It
“I have it in my mind what it’s going to be but I won’t be setting it yet,” said Trump.
Well, stop the threats and just do it. Start with 20 percent to make a clear point, then go for 40 percent when nations retaliate.
I am prepared for a massive global trade war when nations retaliate.
One of us will be wrong and I sincerely hope it’s me.
But please recall Trump’s statement that “trade wars are good and easy to win”. If it was so easy, he would have declared success in his first term. And Biden kept all of Trump’s tariffs intact.
Related Posts
January 6, How Much Revenue Can Trump Realistically Bring in From Tariffs?
There are many moving parts to this question including Congress, retaliations, and consumer impacts.
January 14, Canada Says It Will Match US Tariffs If Trump Launches Trade War
Canadian prime minister Justin Trudeau says Canada will respond in kind to Trump’s tariffs.
January 22, 2025: Trump Renews Threat of 25 Percent Tariffs on Canada and Mexico
After dismissing such threats as bluffs, I now wonder if Trump might be stupid enough to do what he says.
Let’s do it. I am tired of the talk. Make tariffs great again.
If Canada and Mexico are smart, they figure out how to cooperate with each other to be more globally competitive with less US market share. Zero tariffs between them. Maybe they even undercut the US is some key export categories. As the US becomes a pariah nation under Trump, we should expect slow corrosion of our global position because he has created the conditions for countries to diversify away from the US for both economic and political reasons. The US has relied on goodwill and trust for decades to develop world economic dominance. That goodwill and trust is going out like the tide.
Have you noticed that the Province of Ontario is running economic development ads on Fox News lately? I never used to see such ads. If the US scraps its trade treaty with Canada and Mexico, it will be lose, lose, lose all around. Does Trump have the nerve to impose 25% tariffs on Chinese consumer imports?
not only does the US have a trade surplus with Canada, excluding Energy,
the ENERGY it buys is AT A DISCOUNT TO WORLD PRICES… saving the US billions .. HUNDREDS OF BILLIONS a year… YUGE.. as the president would say….
Canada’s only option is to build pipelines to the coasts, and eventually stop selling to the US. this will of course take YEARS…
on.. and a little brought up fact…
the US consumers ~18-20M Barrels a day
the US produces ~13M barrels a day
(numbers close, but may not be most recent)
there’s going to be a bit of a shortfall if Trump cuts off Canada, or if he tariffs the oil coming in…
and i’m not sure how hes’ going to make up the difference… you’re not going to produce 5-7M more barrels overnight. or ever…
The pipeline to the coast might not help as much as believed. The big consumers like China have their preferred suppliers, and there is a lot to choose from.
The relations with China are not good.
sure. but they can sell it to someone other than the US.
additionally, they should build a slew of LNG terminals. the US takes all our NatGas at 2-3$/mbtu, liquifies it and ships to Asia and Europe for $15-25$/mbtu
that’s a LOT of coin canada is giving up..
canada should cut out the middle man..
I have no doubt that the price would be better, just pointing out that China prefers to sign long term delivery contract rather than buying on the spot market.
There was also a plan for a refinery at the terminal.
Just need to get rid of that guy whose name alone raises my adrenaline.
Nope. The Chinese and others will gladly take that oil. And since Canadian oil sells at a discount in the US, they can offer a discount to other countries and still sell it for more than the US currently pays. Half of that oil goes to the US right now, but that can change very quickly.
You are partially correct. Let me help you out a bit. I answered this question recently, but will repeat my answer for you. It’s a bit complicated, but bear with me.
The US produces 3.5 mbpd of conventional heavy oil, and 10 mbpd of light shale oil. So that is 13.5 mbpd of domestic production.
Our refineries are built to use heavy oil, so they cannot use all 10 mbpd of light shale oil, but they can use 6 mbpd of it by blending it with heavy. We have to export the other 4 mbpd of light oil. And every year our shale oil is getting lighter and lighter, so we will probably have to export more of it as time passes.
Our refineries have a maximum capacity of 18 mbpd, but run at around 16 mbpd. This means that they use 3.5 of US heavy, 6 of US light, and 6.5 of imported heavy, 4 of which comes from Canada.
So our refineries produce 16 mbpd of petroleum products. But wait. We export 6 mbpd of those products and import 2 mbpd of those products. Which means we actually “consume” just 12 mbpd of petroleum products. Not 18-20.
People get this wrong all the time because 3.5+10+6.6=20 mbpd of crude oil. But that number doesn’t mean we use 20 mbpd. You have to account for exports of crude and petroleum products.
You are correct when you say that tariffs will increase our prices for all petroleum products substantially. You are also correct when you say that we don’t have a viable alternative to importing those 6.5 mbpd.
On the other hand, Canada is stuck selling oil to us. You produce roughly 5.7 mbpd and consume just 1.3 mbpd, so you must export 4.4 mbpd. The recently completed TMX pipeline can export 1 mbpd from the west coast; half of which is coming to the US already, but could be diverted elsewhere if needed. The remaining 3.4 mbpd of exports can only be exported to the US through existing pipelines.
And our Midwest region is just as dependent on Canada for it’s oil. There are 26 refineries in the Midwest PADD2 region that get 3 mbpd of Canadian oil. There is no viable alternative for these refineries to get their oil from anywhere else. So those regions will see the largest increase in fuel prices when tariffs are enacted.
Your country made a big mistake by not building more pipelines to tidewater and giving yourselves more options to where you sell your oil. Just like Europe made a mistake in being so dependent on Russian oil and gas pipelines.
No offense. Just giving you some facts.
not offended at all. and thank you for the clarification.
i agree completely, and i have been yelling for decades to build pipelines to the coasts. maybe this smartens people up in this country finally.
i’d love to see our oil production double, and sell it all overseas.
Kitimat LNG is finally going to be ready to ship in a few months. finally that’s something. now, build a few more of those while we’re at it.
Yes. Our two countries economies are heavily intertwined. A trade war will hurt us both, though Canada will be hurt more, just because your economy is more dependent on us, than we are on you. Which is just a function of our larger population.
Perhaps when the Conservatives win the next federal election, they will put a big focus on more pipelines to tidewater. Though they would take a very long time to build. But as they say, the best time to plant a tree was thirty years ago. The second best time to plant a tree is now.
I am a big investor in many Canadian oil companies, but I have sold off a considerable amount of them recently, as I still expect Trump to put tariffs on Canada.
I mean i guess yeah….if thats the only way to prove it. I would imagine +200 years would have taught us about mercantilism. But maybe I’m wrong. Maybe Tariffs do work.
Tariffs do accomplish “something”. There is no question about that. The question is whether tariffs accomplish something that is a net positive, or a net negative, and for who. Here is one completely fabricated example: perhaps tariffs will add a couple of car plants, and 4000 good paying unionized auto jobs; while raising the average price of cars by $10,000 each.
The winners are the 4000 employees. The loser is every car buyer. We shall see.
Let the tariff games begin!
I agree Mish. Let the Trump tariff war begin. It is a great real-world experiment. Let’s see how it all works out.
Will new tariffs raise significant revenues? The tariffs that Trump enacted in his first term doubled US tariff revenue from $40 billion to $80 Billion. An extra $40 billion is not very much when compared to annual government spending of $6.75 trillion (less than 1%).
If he puts a 25% tariff on oil imports, that could add up to another $40 billion per year. We import 6.5 mbpd of oil. At $70/bbl this would bring in $3.4 billion per month, or another $40 billion per year. Still not much compared to the budget.
Tariffs on oil would be paid by the US refiners who buy the oil. Refiners typically earn a profit of 4-5 cents per gallon of product output. With such low margins, it is impossible for them to absorb a 25% tariff. They must pass it on. The same goes for gas stations. They also make a profit of 4-5 cents per gallon. So they have no choice but to pass on the tariff to the American consumer. If gas is $3, you can expect it to jump to $3.75 with a 25% tariff, provided the refiner is using all imported oil. This is true for the 26 refiners in the midwestern PADD 2 region.
https://www.afpm.org/newsroom/blog/role-us-refiners-global-market
In anticipation of a tariff war, I have been raising my cash levels in preparation for the opportunities that will appear.
Problem with cars Made in USA is that mainly SUVs and trucks are produced in the US. Small cars are made in Mexico. What is Trump going to do? Make small cars 25% more expensive for 1/2 of his voters? That sounds like political suicide.
For a politician, yes, but not for a cult leader. Thats what makes him so valuable to me.
Which cars are those? This is what I found.
Many vehicles sold in the United States are made in Canada and Mexico, including cars from Honda, Toyota, Chevrolet, Ford, and more.
Canada
Mexico
You can determine if a vehicle was assembled in the United States, Canada, or Mexico by looking at the first digit of its VIN. A VIN that starts with 1, 4, or 5 means it was assembled in the United States, 2 means it was assembled in Canada, and 3 means it was assembled in Mexico.
Much more talk (threats, boasts, blame & lies) to come.
Currently rebooting all government functions…
Step 1: turn off (pause) everything.
Step 2: see who screams for what.
Step 3: negotiate terms to turn it back on.
For King Chaos the Shit Talker, it is indeed, The Golden Age.
One week in and we get the truth about the drones. Why the last admin had to play dumb is beyond me but no one knows who was in charge anyway
Because it’s 100% a lie. You don’t fly test drones over populated areas for “testing” given there are huge swaths of empty land. FAA authorized flights? WTF didn’t the FAA say that then? None of it makes sense and no one is questioning it either.
Great News ! The Secret Service stretch suv limo is delivering Mayo Pete’s virtue signaling bicycle to Ann Arbor from South Bend !
Trump is doing his best to make Mish’s recession predictions come true!
Final GDPNow forecast for Q4 2024 is tomorrow, but today’s 3.2% real GDP growth of Biden’s final quarter is going to be hard for Trump to beat, especially if threats of continually changing EOs and different tariff structures and expensive deportations makes it difficult for US businesses to plan ahead diligently
But we were promised a new golden age, the land of milk and honey, endless prosperity!
It turns out the economy was all just immigrants doing all the work and all the shopping. Everyone else was just transient.
https://www.dailymail.co.uk/news/article-14330075/Factories-stores-eerily-quiet-amid-immigration-crackdown.html
I agree. A recession will make keeping both houses of Congress very difficult in the mid terms.
Wish hope you will tract the “inflation” once the tariffs start.
My bet is the inflation is no where near the Tariff increase!
You can do whatever you want.
Fed up of hearing that words.
Cry havoc and let slip the tariffs of trade war!
I too am very prepared for a trade war…..and ready to profit from clownery. And even better, I have an exit strategy on standby….
I think the tariffs are a good idea. The stupid free traders have driven industry offshore and hollowed out the country. This has caused a huge shift in wealth and greater disparity in incomes. Those are not the hallmarks of a civil society.
10-20% across the board would be a good start.
You fail to understand the real source of the problem.
And that is lack of an enforcement mechanism.
See if you can figure that out.
You are correct. I don’t understand what you’re talking about or what enforcement mechanism you are referencing.
Buckle up, serfs, looks like recession is on the menu!
The voters’ mandate is in
I love people that vote for my interests over theirs! True patriots.
If we don’t like the way it’s working out, we can always pull a Colombian, and change our minds, right? So have at it!!!
good points, Mish. somewhere in the dust, there is a Bluff, of some sort. i cannot wait to see what it is…..
my guess is: Queen’s Pawn 2 to Queen’s Pawn 4. Let’s see how the game progresses.
Youll have to explain something … if Japan and Germany have kept their industries alive and well, and they didnt use tariffs or I assume anything that looks like a tariff, what did they use? Whatever it is, I myself want it! 🙂 If you cant come up with something to explain their success, we are back to tariffs. Theres no shortage of worldwide junk that countries want to dump here, and as long as the crap keeps coming, tax it. Trump may have a point.
Is this a real post? Germany is in the dumps and has been for years. Japan is sitting on a worse debt bubble than us. They had decades of stagnation and now a birth death spiral.
Just because you hear nothing but bad news from the awful, sclerotic “lame stream media” telling you its so horrible that the sun is gonna die in 5 billion years, there’s multiple interpretations. Yes, countries have challenges, but no one doubts the strength and power of Japanese and German corporations. We need what they have (man does not live on part-time Target jobs alone). Your car is BMW, your TV is Japanese, whether you want them to be or not. Stop watching Fox News!
I read. You could also
Economists stated that Germany’s economy was in a “permanent crisis mode”, with the Handelsblatt Research Institute declaring that it was in its “greatest crisis in post-war history” after projecting a third consecutive year of recession in 2025
And it will always be in crisis mode. Brazil is also known as the country of the future .. and always will be …
Wtf? We are discussing Germany 🇩🇪. Why bother
There will be bad news about everyone and everything and there always will be. In the meantime, Germany and Japan continue to be world industrial powers, and we need to do what theyre doing. This is the first time I actually agree with you Trumpanistas on tariffs and youre missing it!
I’ve trained him to be angry and hate people, not to think.
japan and germany had growth in other markets. America’s doemstic economy is stagnant (all for exception some housing and the over inflated housing market/rentals) China isnt allowing many into their market even if weatern countries could enter the Chinese market, western nations are over priced. This is likely due to the currency manipulation yhe chinese managed to peg their currency at. now and the last twenty years.
tarrifs is the only thing left.
Japan and Germany played the game well in the past. they both allowed their currencies to float. they also bought the treasuries needed. both Germany, Japan are no longer playing the game. leaving America desperate. tarrifs will take aim at those who dont play by the rules as Mish says, wait and see. the moce is bold and likely a lot of ahort term pain. retailation will likely occur……
Please post the US GDP for the last 20 years and explain to me how we are “stagnant.”
GDP is a poor measure of the state of national wealth. In the US and most of the ‘West’ the majority of it is now services and consumption spending. The industrial component of GDP is stagnant or falling.
More cafe’s, eating out, medical services due to overeating, gyms. Things that recycle wealth but do not generate new real wealth.
Even the markup on imported goods adds to GDP
Before Biden, the federal deficit was running about 3% of GDP. Now it is about 6% of GDP. Trump wants to have tariffs, cut red tape, cut internal taxes and have the deficit go back to 3% of GDP over the course of 4 years. The current GDP is a Chimera because of excess federal spending.
Germany keeps their industries alive by requiring endless bureaucratic certification, training and licenses. Mish had a post about this years ago.
https://mishtalk.com/economics/everyone-welcome-competition-not-allowed/
And we have no corporate bureaucracy here?
Read the post, a baker has to go through years of training and licensing to bake cup cakes. The U.S. has similar things like a nail salon license but it’s not as bad as Germany, at least not yet.
Take a look at their cars, for instance: they find markets all over the world. Usonian cars struggle to find a market even in the US. That should hint at the answer.
Actually not a bad question on this same Blog, Mish did talked/referenced Pettis ? i blv about how those counties basically force themselves as exporters but at the cost of the consumption for the general public and lower standard of living. I think this was during the Grexit a few years ago…..
Well Mish, welcome aboard