Concern has grown among senior Republicans over President Trump’s tariff policy, while his loyal grassroots supporters keep faith in the long-term goal of greater prosperity and a manufacturing revival.
Economists said the average US tariff would rise to nearly 25 per cent when fully implemented on April 9, even higher than the 1930 Smoot-Hawley tariffs that worsened the Great Recession.
Trump remained indefatigable in the face of plummeting stock markets, insisting that they would soon be booming.
“I think it’s going very well,” he said in his only public appearance on Thursday as he emerged from the White House to travel to Florida.
The US will “have six or seven trillion dollars coming into our country … The markets are going to boom and the country is going to boom,” Trump said.
The president used a medical analogy for the highest American tariffs for 130 years, posting online that “the prognosis is that the patient will be far stronger, bigger, better and more resilient than ever before”.
He sent cabinet members on to the airwaves to try to soothe nervous voters and markets. JD Vance, the vice-president, framed the tariffs as a fundamental reorientation of the American economy that would be combined with moves to boost wallets like deregulation and tax cuts. But he warned: “We are not going to fix things over night.”
Trump’s “liberation day” on Wednesday ended with his first big reverse in the Senate when four Republicans joined Democrats to pass a vote against the state of emergency at the border the president had declared so he could hit Canada and Mexico with 25 per cent charges. The measure will only reach his desk if the more partisan House also passes it, which is unlikely. However, it was the first sign of his iron grip on Congress weakening.
Rand Paul, one of the four Republican rebels, who is not a “usual suspect” critic of Trump’s, said: “Tariffs have led to political decimation. When [President] McKinley most famously put tariffs on in the 1890s they [Republicans] lost 50 per cent of their seats in the next election.”
Thom Tillis, a Republican senator from North Carolina who did not join the rebellion, voiced anxiety about the impact on farmers, who are facing higher costs for fertiliser, most of which is imported. “Anyone who says there will be a little bit of pain before we get things right needs to talk about farmers, who are one crop away from bankruptcy,” Tillis said.
John Kennedy, a Republican senator from Louisiana, said he supported Trump’s goal of persuading foreign manufacturers to build their factories inside America to avoid the tariffs. He said: “I understand his objective. I share it. In the long run, I think it will work. But … in the long run, we’re all dead. The short run matters too.
“We do not know yet the impact of these [tariffs] … and anybody who tells you otherwise, that says they know, has been smoking the devil’s lettuce.”
Yale Budget Lab estimated that the tariffs would cost the average household $3,800 in higher prices this year. This was from the 10 per cent universal tariff and the much higher demands on 60 countries, as well as previous duties on steel, aluminium and cars. Inflation could top 4 per cent this year, up from 2.8 per cent, according to Nationwide Financial.
Vance’s main message was that the cavalry was on the way to mitigate any price rises. “We know a lot of Americans are worried,” he told Fox & Friends. “So we are fighting very hard to bring prices down. We’re gonna have the biggest deregulation in the history of this country. We’re doing a lot of things to lower the cost of energy.”
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But he acknowledged that the transformation to Trump’s new golden age might take some time. “What I’d ask folks to appreciate here is that we are not going to fix things over night,” Vance said. “Joe Biden left us with the largest peacetime debt and deficit in the history of the United States of America, with sky-high interest rates … We’re fighting as quickly as we can to fix what was left to us but it’s not going to happen immediately.”
Vance also appeared to concede that inflation would increase. “We’re going to cut your taxes, you’re going to have more money in your pocket and that’s of course going to help you deal with the cost of inflation,” he said.
Howard Lutnick, the commerce secretary, told CNBC that Trump’s policies would open markets overseas for US exports. “I expect most countries to start to really examine their trade policy towards the United States of America and stop picking on us,” he said. “People are going to start building factories right now, you’re going to see employment leaping.”
Among the grassroots, there was support for Trump. Bill Reilich, a former Republican chairman in Monroe County, New York, said: “What I’m hearing is that people understand there may be some short-term pain, but in the overall, it’s worth it. It’s no different than what our parents went through in World War Two.
“All that anyone’s asking is to be treated equal and it will be a good thing at the end if we’ve got more manufacturing back in our country. We’ve let that slip away, and we’re bringing it back home.”
Bob Klaus, a party activist in Cedar Rapids in eastern Iowa, said he trusted Trump. “I think he’s a lot smarter and has more common sense than people give him credit for because he makes decisions that seem to work most of the time,” said Klaus, 77.
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“Trump talks about tariffs being reciprocal, which seems like another word for fair. In other words, these other countries have been charging us and we just lived with it. So now we’re going to just make it an even deal. That being the case, I’m on board with it. There might be a little bit of suffering in the meantime. Obviously my 401k [pension fund] has dropped but I don’t take out of it anyway.”
Brendan Steinhauser, a Republican strategist in Austin, Texas, said the party’s leaders were nervous that even a temporary leap in prices could prompt blowback from voters in next year’s midterm elections.
He said: “It’s still very early … but if it goes in the wrong direction and it hurts American companies and workers it could have a huge impact, because the economy is always going to be the number one issue in our elections.
“It’s still too soon to tell. Right now, Republicans are giving the president the benefit of the doubt. Privately, most members of Congress, their donors and many party leaders are nervous … but some of them are choosing not to say a whole lot.”
