• The Panama Canal Authority chief said giving preferential treatment to one country's ships would lead to "chaos."
• Ricaurte Vásquez Morales told The Wall Street Journal: "Rules are rules — and there are no exceptions."
• Trump has accused the canal authority of charging "exorbitant" fees to US ships.

Giving US ships preferential rates to navigate the Panama Canal would "lead to chaos," the head of the canal authority said.

"Rules are rules — and there are no exceptions," Ricaurte Vásquez Morales told The Wall Street Journal on Wednesday.

"We cannot discriminate for the Chinese, or the Americans, or anyone else. This will violate the neutrality treaty, international law and it will lead to chaos."

In a news conference at Mar-a-Lago on Tuesday, President-elect Donald Trump demanded that US vessels be given preferential treatment.

He also accused the authority of overcharging US ships and of separately seeking funding from the US to repair the waterway. Vásquez Morales denied both those claims, telling the Journal that the authority funds maintenance from the fees it charges and that Panama hadn't requested funding from the US for improvements.

Ships are charged between $300,000 and $1 million depending on their size and type to pass through the canal.

Those charges "apply to all ships from around the world and there are no exceptions," Vásquez Morales told the Journal.

Trump has repeatedly floated the idea of retaking control of the canal, calling the fees "exorbitant" and a "rip-off."

"The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the US," he said on Truth Social in December.

At Tuesday's news conference, Trump also downplayed Panama's control of the canal and refused to rule out using military force to retake control of the trade route, expanding on a threat he made last month.

"China's basically taken it over. China's at both ends of the Panama Canal. China's running the Panama Canal," the president-elect said.

Vásquez Morales told the Journal: "China has no involvement whatsoever in our operations."

In response to Trump's comments, Panamanian Foreign Minister Javier Martínez-Acha said on Tuesday that only Panamanians operated the canal, adding: "Our canal's sovereignty is not negotiable and is part of our history of struggle and an irreversible conquest."

Trump has also refused to rule out using military force to take control of Greenland, which he said the US needed for "national security purposes."

The 51-mile Panama Canal was officially opened in 1914, creating a new trade route between the Atlantic and Pacific oceans.

The US transferred control to the state-owned Panama Canal Authority in 1999 in accordance with the Torrijos-Carter Treaties, initiated in 1977 by the Carter administration.

Under the treaty, the US has the right to defend the canal from any change to its neutrality.

• Consumer tech spending could hit $537 billion in 2025, the Consumer Technology Association said.
• However proposed tariffs by President-elect Donald Trump could cut into that projected revenue.
• The CTA said tariffs could increase tech prices and lower consumer purchasing power by billions.

Consumer spending on tech could hit a record high of $537 billion this year, according to a new report from the Consumer Technology Association.

But those projected retail revenues might not be met if President-elect Donald Trump follows through on promises of sweeping tariffs.

The CTA's report found the proposed tariffs could lead to tens of billions of losses in revenue, if not more. Trump has said he would institute a blanket tariff of 10 to 20% on all imports and an additional 60% or more tariff on goods from China.

"Such sweeping tariffs could have serious consequences on the market for consumer technology, greatly reducing demand for devices that are heavily reliant on Chinese manufacturing," the report said. "Additional tariff costs on tech products could also reduce consumer purchasing power by $90 billion, to $143 billion."

The CTA's current consumer tech spending projection would amount to an increase of 3.2% compared to 2024.

The CTA has previously found that under Trump's tariffs the average price of laptops and tablets could increase by 45% and of smartphones by 25%. Televisions could see a 9% price increase while video games and consoles could cost almost $250 more than their current sale price.

Brian Comiskey, a futurist at the CTA, said at CES 2025 in Las Vegas this week that without the tariffs the industry was headed for a "super cycle" as consumers seek to upgrade their tech hardware to access the latest AI offerings, TechCrunch reported.

Many economists have previously said that Trump's proposed tariffs would raise prices for Americans, and at a time when many are still feeling the impacts of inflation.

It's still unclear how the incoming administration plans to implement tariffs. After a report from The Washington Post said Trump aides were discussing ways to roll out less wide-ranging tariffs, the president-elect denied it.

Trump wrote on Truth Social that the story "incorrectly states that my tariff policy will be pared back. That is wrong."

AI is leading US consumers towards a tech spending bonanza this year if tariffs don't materialize, new research from the Consumer Technology Association finds.

© 2024 TechCrunch. All rights reserved. For personal use only.

• AI's significant impact on workforce and tech use will continue in 2025, leaders say.
• Shifts in work dynamics, including the introduction of AI agents, are reportedly on the horizon.
• Tariffs under Trump may lead to higher prices and project cuts for businesses, Rimini CFO says.

Talks of artificial intelligence dominated 2024, and tech leaders predict that the next stage of the new AI era will come in 2025 — for better or for worse.

Their mixed predictions indicate that the outlook for AI in 2025 is still uncertain. Still, many execs assert that the way people interact with technology will continue to change in 2025, and it'll likely impact jobs.

Sam Altman, CEO of OpenAI, said in a Sunday blogpost that AI agents could join the workforce this year and "materially change the output of companies." Since generative AI became a more mainstream concept, concerns about job security have risen amongst workers.

Agentic AI, which requires GenAI to work, is the technology that AI companies say could work alongside their employees as digital coworkers.

"We continue to believe that iteratively putting great tools in the hands of people leads to great, broadly-distributed outcomes," Altman wrote.

This year will also reveal if the prediction that Bill Gates has been vocal about for over 10 years will come to fruition. Gates has said on many occasions that two-thirds of all jobs in the US will require some form of education beyond high school by 2025.

Here's what Amazon's CTO, an ADP exec, and other tech leaders say 2025 has in store.

The workforce is evolving.

Management services company ADP uses AI to assist sales reps, and GenAI helps the company prepare for investor days, among other things, according to The Wall Street Journal. Such investments will continue in 2025, Don McGuire, CFO at ADP, said to the Journal.

"Things that people used to sit beside you and have a headset, now you can do those things with GenAI tools," McGuire said.

More intentional tech use is "reshaping our relationship with the digital world," and people are prioritizing wellbeing over attention-seeking, Amazon CTO Werner Vogels said in a December blogpost.

"The workforce of tomorrow will not only be driven by financial success and career progression but by a deeper desire to create positive change in the world," according to Vogels.

As smarter tech integrates into the workforce, Vogels said "a quiet revolution" is happening among workers who value meaningful societal impact over financial success.

Millennials and Gen Z are leading the charge in finding their purpose at work, but Vogels said the trend is being driven by other age groups and the job market itself.

"Harnessing technology for good has become both an ethical imperative and a profitable endeavor," Vogels said.

However, Clement Delangue, CEO of AI startup Hugging Face, predicts a more combative response to AI. He said on LinkedIn that the "first major public protest related to AI" is coming in 2025.

Consumers will move away from distracting technology.

Tech users will find more intentional ways to use their devices in 2025, according to Vogels. The Amazon exec pointed at data related to social media use and mental health issues among teens in the US in his blog about 2025 as an indicator of a need to rethink our relationship with technology.

"Every swipe, headline, and notification are meticulously engineered to hook us," Vogels said.

More people are becoming conscientious of their screen time. Some are implementing rules for themselves or their children, and others are seeking out alternatives like "dumb phones" with no web browsers.

On the other hand, Delangue predicts that other consumers will buy into more futuristic devices, like the robots being developed by Tesla and other robotics companies.

"At least 100,000 personal AI robots will be pre-ordered," he said on LinkedIn.

Tariffs will bring about project cuts.

Donald Trump is weeks away from his second presidential inauguration, and the president-elect has already threatened tariffs on imported goods. It "feels like an inevitability," according to Michael Perica, CFO of software company Rimini Street.

LendingTree economist Jacob Channel previously told Business Insider that consumers will likely be subjected to higher prices for their goods during his term if Trump makes good on his pledge.

Companies may have to make some cuts to offset the effects of tariffs, Perica told the Journal. More businesses will have to adapt their strategies in anticipation of supply-chain disruptions.

"We are absolutely partnering with folks to help them along and take a look and evaluate what's a 'nice-to-have' project versus 'got to have,'" Perica said.

• For years, Tim Cook has overseen the development of Apple's supply chain in China.
• The risk of tariffs on China from Donald Trump requires a complex balancing act from Cook.
• Jamie MacEwan, an analyst, estimates that "almost half of Apple's revenue is exposed to China."

Tim Cook faces an unenviable task this year: keeping a tough-on-China president onside while continuing to lean on the country for Apple's complex supply chain.

The Silicon Valley giant has spent years building a vast supply chain network in China under the leadership of Cook, who was first tasked by Steve Jobs in 1997 with devising a cost-cutting outsourcing plan when Apple was on the brink of bankruptcy.

From Jiangsu in the east to Sichuan in the west, Foxconn, Luxshare, Pegatron, and others have played pivotal roles in helping Apple generate over $1.8 trillion in net sales this decade alone by serving as the manufacturing conveyor belt for everything from iPhones to Macs.

However, Apple's ability to maintain its most important manufacturing network could now depend on how effectively Cook negotiates with President-elect Donald Trump — while appeasing rival powers in Beijing, in whose hands Apple's supply chain largely sits.

Trump has signaled a return to the trade war that defined his first term by threatening to slap new tariffs on China. Such a move risks adding new costs to Apple's supply chain and could push it further from the country it has depended on to turn out iPhones for decades.

"It's extremely complicated because of the depth of the dependence on Chinese manufacturing competence," Kevin O'Marah, a supply chain expert and cofounder of research firm Zero100, told Business Insider.

What lies ahead for Cook then is a delicate balancing act: reckoning with Trump's political gameplan while protecting the supply chain empire he has staked Apple's fortunes on.

A high-stakes balancing act

Cook seems acutely aware of the dilemma, which is why he's been busy courting both sides.

Over three trips to China this year, the Apple CEO has met with top leaders like Chinese Premier Li Qiang, visited local suppliers, and attended an industry conference in Beijing. He has done all this while singing Trump's praises.

In November, Cook congratulated Trump on his election victory with a post on X that said, "we look forward to engaging" to ensure the US continues its technology leadership. He turned up at Trump's Mar-a-Lago resort a month later, but only after visiting China weeks earlier.

Jamie MacEwan, senior analyst at Enders Analysis, told BI that Cook's ability to continue getting what it wants out of China will "take a huge amount of public diplomacy from Apple leadership" as they "navigate increasingly choppy geopolitical waters."

Pulling off this diplomatic feat won't come easy. Apple has wrapped up its vast fortune in a sprawling supply chain in China that will prove difficult to untangle in the near term. While Apple generated $66.9 billion of its $391 billion in net sales from the Greater China region in its last fiscal year, MacEwan estimates that "almost half of Apple's revenue is exposed to China through direct sales and the supply chain," making it tough to leave China behind.

Apple has, of course, slowly been making efforts to diversify its supply chain. In the six months to September, Apple shipped almost $6 billion worth of iPhones made in India, according to Bloomberg, up a third from the same period last year.

Earlier this month, meanwhile, it emerged Apple would begin producing AirPods from a new factory in India for the first time, starting this year, and overseen by a Foxconn unit. The number of vendors in Vietnam supplying Apple has steadily increased, too.

Easier said than done

Though Apple has been taking these steps, experts believe that China remains vital to Apple's operations for a key reason: it's not yet possible to replicate the scale of its operations in the country elsewhere.

O'Marah said that much of Apple's success in China has come down to the "depth of the engineering in the supply chain" established by Cook.

The company has established a deep relationship with suppliers that involves the development of "millions and millions of identical pieces of machinery," O'Marah said, which comprise a "very deep and very complex bill of materials and componentry."

Simply getting up and leaving if new tariffs hit, then, is not an option. "India is picking up quite a bit of opportunity, but it'll take them a decade to get there," O'Marah said. "They don't have the same amount of manufacturing expertise, and to transfer that in takes a lot of time."

Dipanjan Chatterjee, a principal analyst at Forrester, agrees. He told BI that although "there is no way yet to tell how the proposed tariffs on China will play out," boosting India's manufacturing volume in the face of tough new taxes on China won't be straightforward.

"The devil is in the details," he said. "For example, India will have to be able to scale up rapidly to accommodate that kind of additional volume — not an easy task."

How Apple will proceed remains to be seen. According to a Reuters report, China's commerce minister Wang Wentao told Cook that Apple is "welcome to continue deepening its presence in the Chinese market."

Cook's growing closeness with Trump over the years may offer him some confidence. In 2019, when Trump planned a 10% tariff on Chinese imports, Cook successfully negotiated exemptions with the president and ensured Apple's supply chain would stay safe.

O'Marah also notes that tariffs are based on political rather than economic logic, so an almost 40% tariff on US imports from China next year — like the one predicted in a poll of economists conducted by Reuters — could "pop up and disappear overnight."

That said, the situation remains immensely complex for Cook.

MacEwan notes that Trump's future tariffs remain a "real wild card." A bad-case scenario would "increase the impetus for Apple to reshore more manufacturing out of China, but there is a limit" to what can be done. There is a risk that Beijing could retaliate too, he said.

"This isn't like Walmart sourcing more goods from India," MacEwan said. "Each iPhone is the result of a complex and highly integrated and optimized supply chain."

It's generally a rare thing for the person you're interviewing to burst out laughing. But that's what happened to me, recently, on a call with Ernie Tedeschi, the director of economics at the Yale Budget Lab who in March wrapped up a three-year stint on the White House Council of Economic Advisers. The question that evidently tickled Tedeschi: Was the "vibecession" fake? The vibes around the economy — as in, the way consumers and businesses say they feel about it — have been changing lately, and not because the economy itself is markedly different from how it was in the recent past. Inflation is down from its peak, but it's up a bit from where it was earlier this year. The labor market is still strong, and consumer spending is still solid.

Despite the relatively steady environment, people are feeling a whole lot more enthusiastic. In November, small-business sentiment reached its highest level since June 2021, surveys for the National Federation of Independent Business' optimism index found. The number of business owners who said they expected the economy to improve and thought it's a good time to expand increased significantly. Corporate executives' expectations soared for the fourth quarter, the Business Roundtable's economic-outlook survey found. CEO forecasts for hiring, capital investment, and sales improved.

Consumer sentiment has been on the upward slope for multiple months, surveys from the University of Michigan found, and it is continuing that trend heading into the end of the year. Underneath the top-line number, however, there's been a significant partisan shift. Republicans' expectations around the economy improved in December, while Democrats' got worse. It's part of a trend in economic sentiment: People feel a lot better about the economy and their prospects when the political party they support is in charge. So I wanted to know, was Americans' deep sense of economic pessimism over the past year — and the recent turnaround — just a politically driven mirage?

After the embarrassing-for-me chuckle, Tedeschi responded. "The short answer is no. The vibecession was not fake. The long answer is no, but … ," he said. Perceptions of the economy have to do with more than the economy itself. That doesn't mean that people were lying or that their answers didn't have some real economic motivation, but there's clearly more to it than the material conditions in front of them — it's also about their ideological leanings and how that shapes what they believe is ahead.

"Perceptions of the economy are definitely deeply partisan," Tedeschi said.

When people say the economy feels bad, they can mean a variety of things — prices are too high, the news they read is negative, the president is old. Feelings are not facts, including when it comes to GDP. Politics colors a lot of the way businesses and consumers say they see the world around them, including when it comes to money.

It's easy to say the shift in sentiment is partisan flag-waving — now that Donald Trump is headed to the White House, Republicans are going to say everything's great, and to the Democrats, it's all terrible. But that's not really what's happening, said Joanne Hsu, the director of consumer surveys at the University of Michigan. When people say their expectations are better or worse, it's not simply the outcome of the election they're responding to but the policies they believe are on the horizon.

"With the election of Trump, people have an idea of how economic policy might change over the next year and over the next four years. So people are expecting tariffs. They're expecting action on immigration," Hsu said. "The thing is that people across the population really disagree on whether or not these policy changes are a good thing or a bad thing for the economy."

Democrats are worried that Trump's threatened tariffs and promise to undertake mass-deportation efforts will make things pricier. Republicans, on the other hand, think that these policies will be good for the economy and that Trump will help bring down inflation. Independents, Hsu said, are in the middle.

To a large extent, it makes sense that small businesses and corporate executives feel sunnier about the future. The deregulation and tax cuts that are likely to result from a Trump presidency are music to the business community's ears.

"They're optimistic that policies that they like are going to get enacted over the next four years," Tedeschi said.

Businesses don't love the idea of tariffs, but many are hopeful that there are ways they can get around them or that the president-elect isn't so serious about them. Or they just plan to pass along any price increases to consumers anyway. (There may be some amount of denial going on among corporate executives and Wall Street investors, all of whom seem to be ignoring some of the potential downsides of Trump's policy promises and the instability he could represent.)

Overall, the response is fairly logical — if you think what's to come is good for you, you feel good about it. If you think it's not, the opposite.

Over the past couple of years, there have been a lot of efforts to explain the vibecession, the phenomenon where the economy, on paper, looks pretty good but consumers say it's terrible (even though in many cases, they say that they, personally, are doing just fine). No one has come up with a definite answer on what's going on, though high prices — even as inflation has cooled — are likely a big part of the equation. But the fact of the matter is that people are channeling a lot of things when they evaluate the economy, which is a nebulous concept to many people in the first place.

In a particularly polarized political environment like the one we're in right now, a person's red or blue stripes are inevitably going to influence their evaluations. As much as it may be policy-related, it is also partisan, and it's partisanship that's getting worse.

Hector Sandoval, the director of the Economic Analysis Program at the University of Florida, released a study in early 2024 looking at the impact of national elections on consumer sentiment and spending intentions. The research found a "significant boost to consumer morale" when a person's affiliated party won a presidential election. It also found that over the decades, the swings had become more pronounced.

"It actually became more extreme," Sandoval said. In 1992, when Bill Clinton was elected, there was some partisan change, but it's something one might "not really even bother" to note, he said. It happened in 2000 when George W. Bush was elected, but also to a relatively benign degree. "But then, I will say, 2008, 2016, 2020, especially 2016, those are where you are surprised how the gap is just becoming more and more," Sandoval said.

Michigan has been consistently asking its survey respondents about their political leanings monthly only since 2017, but Hsu said polarization had become increasingly evident in its data over the past 40 years. The gap was especially pronounced under the first Trump administration, she said.

Whether you think the economy is good, bad, or wherever in between, we can all probably agree the way that we measure people's feelings about the economy is a bit broken. It's no longer really possible to say, "XYZ economic data says this, so consumers will feel ABC." It's not clear whether this is a temporary pandemic-driven blip or a permanent shift in how people relate to the economic forces around them. What makes this even more complicated is what consumers say they feel isn't even reflected in what they do. Throughout these past years of turmoil, consumers have said everything is terrible and spent a bunch of money anyway. Many people's bank accounts, especially those in the middle- and upper-income brackets, are fine.

"People are spending as if they are much happier than they are," Tedeschi said. He added that this disconnect between the vibes and the data meant that when the vibes get better, it might not mean much, tangibly. "Even if consumer sentiment recovers, even if the vibecession goes away, it may mean that there's not much of an upside for the real economy," he said.

Economic sentiment is, of course, an economic indicator, but it's also a political indicator. In some respects, it might be a better guide as a poll of political job performance than for how people are actually doing financially. While the vibecession was not fake or some giant mirage, there's more going on beneath the surface. If you're a Republican, you're feeling real good about February. If you're a Democrat, enjoy the last of those good vibes now.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.

Under Joe Biden's direction, the US Trade Representative (USTR) launched a probe Monday into China's plans to globally dominate markets for legacy chips—alleging that China's unfair trade practices threaten US national security and could thwart US efforts to build up a domestic semiconductor supply chain.

Unlike the most advanced chips used to power artificial intelligence that are currently in short supply, these legacy chips rely on older manufacturing processes and are more ubiquitous in mass-market products. They're used in tech for cars, military vehicles, medical devices, smartphones, home appliances, space projects, and much more.

China apparently "plans to build more than 60 percent of the world's new legacy chip capacity over the next decade," and Commerce Secretary Gina Raimondo said evidence showed this was "discouraging investment elsewhere and constituted unfair competition," Reuters reported.

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• Donald Trump has said the EU will face tariffs unless they make up their trade deficit with the US.
• He has told the bloc to make a "large scale purchase" of US oil and gas to balance trade relations.
• In 2022, the US purchased $131.3 billion more of goods and services from the EU than vice-versa.

US President-elect Donald Trump said he has told the European Union it must purchase a large quantity of US oil and gas, or he will impose tariffs on the trading bloc.

"I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!" Trump posted on his Truth Social platform on Friday.

The EU and US have long maintained deep economic ties, but in recent years, the balance of trade has tilted in Europe's favor. In 2022, the overall US goods and services trade deficit with the EU was $131.3 billion.

While the US imports more goods in the trade partnership than the EU, the reverse is true for services.

In 2023, the US exported €396.4 billion ($411.5 billion) of services to the EU, while importing €292.4 billion ($303.5 billion) — a US surplus of €104 billion ($107 billion), according to EU figures.

"The EU and US have deeply integrated economies, with overall balanced trade and investment," Olof Gill, a European Commission spokesperson, told Business Insider.

"We are ready to discuss with President-elect Trump how we can further strengthen an already strong relationship, including by discussing our common interests in the energy sector," he added.

"The message is clear: the European Union is committed to continue working with the United States, pragmatically, to strengthen transatlantic ties," European Council President António Costa told reporters following a meeting of the European Council on Thursday.

Trump made tariffs central to his reelection campaign, suggesting a blanket 10% tariff on goods from all countries. It is still uncertain which policies he will introduce once in office.

The US is one of the EU's largest trading partners, particularly for industries like automobiles, pharmaceuticals, and luxury goods.

Individual countries like Germany, whose stuttering auto market depends heavily on imports to the US, would be particularly hard hit by renewed tariffs.

The pressure of potential tariffs comes as the eurozone struggles with sluggish economic growth and the ongoing war in Ukraine. The bloc expanded by 0.2% in the most recent quarter, compared to 0.7% growth in the US.

On Wednesday, Federal Reserve Chair Jerome Powell said Trump's proposed tariff plans pose more uncertainty to the US economy in the coming year.

"We don't know what will be tariffed, from what countries, for how long, in what size. We don't know whether there'll be retaliatory tariffs. We don't know what the transmission of any of that will be into consumer prices," Powell told reporters.

The European Commission did not reply immediately to a request for comment from Business Insider.

• The Federal Reserve cut interest rates in its final decision of the year.
• It also penciled in two interest-rate cuts in 2025.
• Still, Powell said that Trump's proposed trade policies pose economic uncertainty.

President-elect Donald Trump's potential trade policies could change the Federal Reserve's plans in the coming year.

On Wednesday, the Federal Open Market Committee announced its third consecutive interest-rate cut of the year, lowering rates by 25 basis points. Alongside the rate cut announcement, the Federal Reserve's quarterly Summary of Economic Projections also penciled in two interest-rate cuts for 2025, based on the median prediction from voting Fed members.

Markets took a dive after the Fed announcement, with the Dow Jones Industrial Average closing down over 1,100 points, or about 2.6%.

Fed chair Jerome Powell said during the Wednesday press conference that the decision to cut rates in December was "a closer call" but ultimately "the best decision" to achieve the Fed's dual mandate of maximum employment and price stability.

"I feel very good about where the economy is. Honestly, I'm very optimistic about the economy, and we're in a really good place. Our policy is in a really good place. I expect another good year next year," Powell said.

However, Powell said Trump's proposed tariff plans pose more uncertainty to the US economy in the coming year.

The president-elect has suggested he would impose broad tariffs on imports from key trading partners with the US, including China, Mexico, and Canada, which could lead to higher prices for imported goods.

At this point, Powell said there is too much uncertainty around Trump's trade plans to make any concrete predictions about next year's policy decisions at this point.

"We just don't know really very much at all about the actual policy, so it's very premature to try to make any kind of conclusion," Powell said. "We don't know what will be tariffed, from what countries, for how long, in what size. We don't know whether there'll be retaliatory tariffs. We don't know what the transmission of any of that will be into consumer prices."

Additionally, Powell said some FOMC members did consider fiscal policy, like tariffs, in their economic predictions, showing how the Fed is facing a range of uncertain scenarios in 2025.

He said that once Trump unveils his policies, the Fed would consider any necessary changes to its policy, but "we're just not at that stage."

Over the past year, Powell has reiterated that the Fed should move more cautiously instead of risking cutting rates prematurely and having to course correct later on. That's still the Fed's outlook going into the new year as the central bank continues its goal of reaching 2% inflation.

Amid economic progress over the past year, Powell said that inflation is coming down at a slower pace than the Fed would prefer. The consumer price index, which measures inflation, rose 2.7% year-over-year in November, a slight uptick from the 2.6% reading in October.

"When the path is uncertain, you go a little bit slower," Powell said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture, you just slow down."

• Trump said he plans to impose a 25% tariff on Mexican and Canadian imports, plus 10% on Chinese imports.
• Democrats have generally opposed Trump's tariff plans — but at least one is offering him praise.
• Rep. Jared Golden, who previously introduced a 10% tariff bill, says Trump's "off to a good start."

President-elect Donald Trump is winning praise from one House Democrat over his recent threat to impose tariffs on goods from Mexico, Canada, and China.

"I think Trump's off to a good start there," Rep. Jared Golden, a centrist Democrat who represents a GOP-leaning congressional district in Maine, told Business Insider at the Capitol on Thursday.

Golden isn't your average Democrat. While many in his party — including Vice President Kamala Harris, the 2024 Democratic presidential nominee — have long panned Trump's tariff plans as a burdensome tax on consumers, Golden has embraced the idea as a way to spur growth in domestic industries.

In September, Golden introduced a bill that mirrored Trump's proposal for a 10% tariff on all foreign imports. Under Golden's "Balance Unequal International Labor and Trade for the United States of America" (BUILT USA) Act, that tariff would increase by 5% for every year that the United States maintains a trade deficit.

Other Democrats have taken the opposite approach, citing economists who say that the costs of tariffs would be passed on to regular consumers. Reps. Suzan DelBene of Washington and Don Beyer of Virginia recently introduced a bill that would block Trump from unilaterally imposing tariffs via executive order.

Trump recently said that he "can't guarantee" that Americans won't pay higher prices as the result of tariffs.

The president-elect's latest tariff proposal includes a 25% tax on imports from Mexico and Canada. In a November Truth Social post, Trump said he would sign an executive order to impose those tariffs on the first day of his presidency, and that they would remain "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country."

He announced a 10% tariff on China that same day, blaming the country for the "massive amounts of drugs, in particular Fentanyl, being sent into the United States."

Golden pointed out on Thursday that both parties have embraced tariffs in recent years, citing President Joe Biden's decision to maintain tariffs that Trump had instituted during his first term. "We've had eight years of bipartisan executive branch consensus on tariffs," he said.

"Tariffs alone are not necessarily good or bad. They've got their positives and negatives," said Golden. The congressman said he'd like to see Trump's tariffs coupled with other policies, such as investments in domestic manufacturing and subsidizing American-made goods to offset potential retaliatory tariffs from other countries.

"All of those things in combination, I think, can make for good economic policy. They don't stand necessarily well on one foot," said Golden. "I think we've seen some of that in the last four years and a little bit in the four years before that."

"You don't just take an economy that's been heading in wrong direction for decades and turn it around like that," Golden said, snapping his fingers.

• Trump said in his Person of the Year interview that lowering grocery prices is "very hard."
• He said that high food prices were part of why he won the election.
• Some economists think Trump's economic plans, like tariffs and deportations, will be inflationary.

President-elect Donald Trump didn't commit to being able to lower grocery prices in his Person of the Year interview with Time Magazine, after flagging the issue as an important part of his win.

Time asked Trump if failing to lower grocery prices, as he said he would do on the campaign trail, would make his presidency a failure.

"I don't think so. Look, they got them up. I'd like to bring them down. It's hard to bring things down once they're up," he said. "You know, it's very hard. But I think that they will."

Trump added that he thinks "energy" and "a better supply chain" will help bring down costs.

The economy consistently ranked as voters' top issue in the presidential election, with inflation in particular at the top of mind. Frustrated with the price of everything from eggs, to meat, to cereal, many voters said they supported Trump because they thought he would lower everyday costs.

On the campaign trail, Trump vowed to lower food prices, saying at a rally on September 23, "Vote Trump and your incomes will soar. Your net worth will skyrocket. Your energy costs and grocery prices will come tumbling down." When talking about groceries in an interview last week, he said that he would "bring those prices way down."

In the interview, Trump said that Democrats lost because of their failure to talk about the economics of voters' daily lives, like the experience of buying groceries. Some economists predict that the president-elect's plans, like mass deportations and broad tariffs, will be inflationary. Walmart, the country's biggest grocery retailer, is among the companies that said it will likely raise prices if Trump enacts his trade agenda.

When asked whether his proposed mass deportations, including for migrant agricultural workers, would spike food prices, Trump said no.

"No, because we're going to let people in, but we have to let them in legally," he said, before moving on to talk about not allowing prisoners into the country.

Inflation ticked up slightly in November, with the consumer price index rising to 2.7% from a year ago, as expected. The food-at-home index rose slightly as well, reaching 1.6% in November compared to 1.1% in October.

Representatives for Trump did not immediately respond to Business Insider's request for comment.

• China's exports grew 6.7% in November, hitting $312 billion, despite economic challenges.
• The growth reverses last year's decline, driven by strong global demand and frontloaded orders.
• Beijing is planning proactive fiscal policies amid tariff threats from President-elect Trump.

It's been a difficult year for China's economy, but the country is still expected to hit its GDP growth target, thanks to strong global demand for its exports.

In November, China's exports grew 6.7% from a year ago to $312 billion — the highest level since September 2022, per official data released on Tuesday.

Some of the exports in November could have been from US importers who were frontloading to avoid potential higher tariffs in President-elect Donald Trump's second term, BofA Securities analysts wrote on Tuesday. This activity could hold up in the near term, they added.

The robust November import adds to a 5.1% growth in exports through the first 10 months of this year and reversed a 4.6% decline in exports last year, presenting the "biggest upside surprise" for China's economy in 2024, wrote Lynn Song, the Greater China economist for ING, in a note last week.

However, given that China's exports in November were strong due to stockpiling, its upside could be short-lived — especially as global demand slows.

"We are likely going to see a payback of such frontloading in 2Q-3Q next year, aggravating the potential impact of tariff increases," wrote the BofA Securities analysts.

As it was, China's November imports — though robust — missed the 8.5% increase anticipated by economists in a Reuters poll. The growth was also lower than October's 12.7% rise.

And it could get worse for the world's second-largest economy amid US President-elect Donald Trump's tariff threats.

Trump has pledged to slap 60% tariffs on all imports from China and an additional 10% on China, citing its role in the fentanyl trade.

China's consumer demand also isn't holding up. Imports contracted 3.9% from a year ago, as Chinese people tighten their belts and trade down for cheaper purchases.

Beijing gets ready for Trump 2.0

Having dealt with Trump's first presidency — during which the US and China started its trade war — Beijing is getting ready for Trump 2.0.

The Chinese leadership is holding its Central Economic Work Conference this week.

The meeting comes just after a Politburo meeting on Monday, during which China's top leadership pledged "a more proactive fiscal policy and a moderately loose monetary policy" ahead, according to Xinhua state news agency.

Xinhua added that China will also step up "unconventional" counter-cyclical adjustments and boost domestic demand and consumption.

"The strong tone on policy stance suggests that Beijing is very determined to stabilize growth and will step up fiscal spending next year," wrote Ting Lu, Nomura's chief China economist, on Tuesday.

Markets viewed the Politburo's plans positively, with China's stocks and bonds rallying on Monday. Optimism faded on Tuesday, with markets relatively muted.

"We believe China is not in a typical downcycle, we think Beijing needs to do much more beyond increasing fiscal spending and printing money to achieve a real recovery," wrote Lu.

China has been pulling out moves to boost its flagging economy this year, including aggressive stimulus measures in late September that sent the stock market surging 8.5% in one day.

China's benchmark CSI300 and Hong Kong's Hang Seng Index are both about 20% higher this year to date but are far below their peaks in early 2021.

• Trump has proposed 25% tariffs on imports from Canada, China, and Mexico.
• Trump said he doesn't "believe" the tariffs would cause price increases at home.
• But, he told Kristen Welker on NBC's "Meet the Press" on Sunday, "I can't guarantee anything."

President-elect Donald Trump, in an NBC News interview that aired on Sunday, said he doesn't "believe" his tariff proposal will raise consumer prices for American families but stopped short of making a promise.

"I can't guarantee anything," Trump told "Meet the Press" moderator Kristen Welker in his first major network television interview since the November general election. "I can't guarantee tomorrow."

Trump then said that before the COVID-19 pandemic, he placed tariffs "on a lot of different countries."

"We took in hundreds of billions of dollars and we had no inflation," the president-elect told Welker. "In fact, when I handed it over, they didn't have inflation for a year and a half."

Trump in November floated 25% tariffs on imports from Canada, China, and Mexico, the top three trading partners of the United States. The president-elect has criticized what he says is the free flow of drugs and illegal migrants into the United States from the three countries.

Late last month, Trump also threatened economic sanctions against the BRICS group, a bloc of nine emerging market countries. He said he would institute "100% tariffs" if they sought to "move away" from the US dollar.

Trump, while on NBC, reiterated that he's a "big believer in tariffs" — calling them "beautiful" — and said the United States is subsidizing Canada and Mexico.

"If we're going to subsidize them, let them become a state," the president-elect said. "We're subsidizing Mexico, and we're subsidizing Canada, and we're subsidizing many countries all over the world. And all I want to do is have a level, fast, but fair playing field."

Late last month, Prime Minister Justin Trudeau of Canada traveled to Mar-a-Lago to dine with Trump after his tariff threats. Trudeau later said he had an "excellent conversation" with the president-elect.

Mexican President Claudia Sheinbaum also described her recent conversation with Trump as "excellent," stating that the two discussed her country's plans for migration.

The economy was a top issue for voters in the November election, with Trump defeating Vice President Kamala Harris largely due to dissatisfaction with President Joe Biden's handling of inflation. Harris sought to define her economic plan — zeroing in on price gouging and tackling housing affordability — but she could not reverse Trump's advantage on the issue.

Across the United States, Trump cut into traditional Democratic advantages with working-class voters and minority groups, with many siding with him at the ballot box over his focus on inflation.

China has immediately retaliated against the US following new export curbs that the Biden administration announced Monday, which restrict a wider range of Chinese businesses from accessing any foreign products that include even a single US-made chip.

On Tuesday, China's Ministry of Commerce punched back, announcing a ban that takes effect immediately on "exports of 'dual-use items' related to gallium, germanium, antimony, and superhard materials to the US," Reuters reported. Such "dual-use items" cover goods and technologies used for civil or military purposes, while the rare-earth metals are critical to tech manufacturing.

"In principle, the export of gallium, germanium, antimony, and superhard materials to the United States shall not be permitted," China's ministry said.

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• Donald Trump's latest tariff threat is to levy 100% duties on goods from the nine BRICS countries.
• He framed the threat as a bargaining chip, warning BRICS against competing with the US dollar.
• The US imported billions of dollars of goods from BRICS in 2023, including apparel and electronics.

President-elect Donald Trump's latest trade threat on nine countries could affect key US imports, risking price increases if the tariffs are implemented.

In a Saturday post on Truth Social, Trump targeted the BRICS group, which comprises nine countries: Brazil, Russia, India, China, South Africa, Ethiopia, Egypt, Iran, and the United Arab Emirates. All have pushed to curb the global dominance of the US dollar. He wrote that he would impose a 100% tariff on those countries' goods unless they committed to not creating another currency that competes with the dollar.

"There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America," Trump wrote.

Business Insider looked at the top goods the US imports from BRICS nations, including medicine, apparel, and electronics. While Trump appears to be using the tariff threats as a negotiating tool and could choose not to implement them at the scale he's proposing, the top imports from the targeted countries could see prices increase even with smaller tariffs.

Census Bureau trade data showed that in 2023, the BRICS nations together accounted for about $578 billion in US imports. China was responsible for the lion's share of that trade, with about $427 billion.

In 2023, the US imported $66.7 billion in cellphones and other household goods from China, $37.4 billion in computers, and $32 billion in toys, games, and sporting goods.

The US imported $151 billion in goods from the remaining eight BRICS nations, including over $11 billion in pharmaceutical preparations, followed by nearly $9 billion in gem diamonds, $6.3 billion in crude oil, and $6.1 billion in cotton apparel and household goods. India accounted for much of the imports from BRICS nations other than China.

Trump is targeting this group because some BRICS leaders have previously suggested acting to reduce their countries' reliance on the US dollar. Last year, Brazilian President Luiz Inácio Lula da Silva proposed creating a common currency among the BRICS nations.

The tariff threat on BRICS came just days after Trump said he would impose a 25% tariff on imports from Mexico and Canada that would remain in effect "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" He also warned of a 10% tariff on imports from China on top of any additional tariffs put in place on the country.

Russia has already responded to Trump's tariff threat. The Kremlin spokesperson Dmitry Peskov told reporters on Monday that if the US used "economic force to compel countries to use the dollar," it would empower countries to shift to other currencies for international trade.

Some companies, including Walmart and Columbia Sportswear, have already said they are preparing to increase prices should Trump implement tariffs on key trading partners.

The Trump team did not immediately respond to a request for comment on the impact of Trump's tariff threats on prices. Trump has previously said tariffs will not hurt Americans, misleadingly calling them "a tax on another country" (tariffs imposed by the US are paid by US importers).

During Trump's first term, he threatened tariffs against Mexico as a response to illegal immigration over the southern US border but later withdrew the plan. Sen. Bill Hagerty told NBC News on Sunday that trade had long been used as a "strategic tool," and he said he supported Trump using tariffs as leverage to achieve his priorities.

"We need to take a very hard look at countries that don't have our best interests at heart, countries that are allowing our borders to be violated," Hagerty said, "and use those tariffs as a tool to achieve our ends."

• Trump on Saturday floated "100% tariffs" on the BRICS group of emerging markets.
• Trump is pushing back on efforts to dethrone the US dollar as the primary global reserve currency.
• Trump's remarks come as the BRIC nations seek to flex their economic strength on the global stage.

President-elect Donald Trump on Saturday lashed out at the BRICS group of emerging market countries, threatening to impose 100% tariffs if they try to "move away" from the US dollar.

BRICS comprises nine countries — Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates — which are aiming to flex their economic power in a world where the US dollar continues to reign supreme as the leading global reserve currency.

Amid Russia's push for BRIC nations to curb the international dominance of the US dollar, Trump took to his Truth Social platform to decry such a move.

"The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER," he wrote. "We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy."

The president-elect continued: "They can go find another 'sucker!' There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America."

During an October summit of the BRICS nations, Russian President Vladimir Putin accused the United States of "weaponizing" the dollar.

"It's not us who refuse to use the dollar," he said at the time, according to The Associated Press. "But if they don't let us work, what can we do? We are forced to search for alternatives."

Trump's latest remarks came just days after he threatened 25% tariffs on imports from Canada, China, and Mexico, the top three trading partners of the United States. Trump pressed the three countries on the flow of drugs and illegal migrants coming into the United States.

Justin Trudeau, Canada's prime minister, spoke with Trump earlier this week following the president-elect's pledge to target his country — and touted the long-standing relationship between the two countries. Trudeau later reiterated that tariffs would hurt both Canadian and American consumers.

On Friday, the prime minister traveled to Trump's Mar-a-Lago estate in Florida, where he said he had an "excellent conversation" with the president-elect.

Trudeau's office said in a statement that the prime minister and Trump "shared a productive wide-ranging discussion."

"As Canada's closest friend and ally, the United States is our key partner, and we are committed to working together in the interests of Canadians and Americans," the statement continued.

Mexican President Claudia Sheinbaum, meanwhile, also spoke with Trump on Thursday, saying afterward that "there will not be a potential tariff war" between Mexico and the United States.

• Trump vowed to impose tariffs on Canada and Mexico on his first day in office.
• Canada's prime minister Justin Trudeau warned tariffs will harm both Canadian and American consumers and industries.
• Trudeau said he and Trump will "work together as we previously did."

Canadian Prime Minister Justin Trudeau responded to President-elect Donald Trump's Monday vow to impose tariffs on Canada and Mexico on day one in office.

Trudeau, who's been Canada's prime minister since 2015, told reporters in Prince Edward Island, Canada, that Trump's expected action will have consequences not just on Canadians but also on American consumers, according to the Associated Press.

"Our responsibility is to point out that he would not just be harming Canadians, who work so well with the United States, but he would actually be raising prices for Americans citizens as well and hurting American industry and business," Trudeau said.

After a phone call earlier in the week to discuss the plans, Trudeau also made his way to West Palm Beach on Friday to meet with Trump, sources told Bloomberg.

Trump plans to impose 25% tariffs on goods coming from the northern and southern neighbors of the US. He said it's a direct response to the inflow of immigrants and narcotics coming into the country illegally from Canada and Mexico, he said.

Canada and the US worked together during Trump's first presidency when re-negotiating the North American Free Trade Agreement. Trump threatened to use tariffs then as well. His threat of tariffs on imports from Mexico led to an expansion of the Migrant Protection Protocols program across the US-Mexico border.

Trudeau noted that the two have been able to come to an agreement in the past.

"We can work together as we did previously," Trudeau said.

While Canada has yet to impose any tariffs of its own, a senior official told AP that it is looking into introducing retaliatory tariffs on certain items from the US.

"We're going to work together to meet some of the concerns," Trudeau said. "But ultimately it is through lots of real constructive conversations with President Trump that I am going to have, that will keep us moving forward on the right track for all Canadians."

Mexico's President Claudia Sheinbaum Pardo has already said that her country would impose tariffs on the US if Trump goes through with his plan.

Sheinbaum said during a press conference this week that "one tariff will be followed by another, and so on, until we put joint ventures at risk."

As previously reported by Business Insider, Canada was the top export destination for 32 states in 2016. According to the Toronto Region Board of Trade, about 77% of Canada's exports go to the US.

• Donald Trump's proposed tariffs could raise car prices, impacting US and European automakers.
• Tariffs may cost carmakers 17% of annual earnings and lead to credit downgrades, per S&P Global.
• General Motors, Jaguar Land Rover, Stellantis, and Volvo could be hit the hardest.

President-elect Donald Trump's new tariff proposals could hit American and European carmakers hard — and could push prices up for your next car.

A Friday note by S&P Global estimates a 25% tariff on Canadian and Mexican imports, coupled with a 20% tariff on light vehicle imports from the EU and UK, could cost some carmakers 17% of their annual earnings — and as high as over 30% — before factoring in interest, taxes, depreciation, and amortization.

Higher tariffs could hit General Motors, Jaguar Land Rover, Stellantis, and Volvo hardest, S&P Global said. Meanwhile, BMW, Ford, Hyundai, and Mercedes-Benz may be less impacted.

"Donald Trump's re-election will likely intensify the headwinds the global auto industry will face in an already challenging 2025," the authors wrote.

These tariffs could push car prices higher and lead Americans to dig deeper into their wallets for another vehicle. Wells Fargo estimated Wednesday that tariffs could raise the price of cars made in the US by an average of $2,100. For vehicles fully produced in Canada or Mexico, prices in the US may increase between $8,000 and $10,000 higher, Wells Fargo estimated.

Kelley Blue Book data from October shows the average new vehicle transaction price in the US was over $48,600.

Trump announced on Monday that on his first day in office, he would sign an executive order that would put a 25% tariff on all goods from Canada and Mexico and would remain in effect until "drugs, in particular, fentanyl, and all illegal aliens stop this invasion of our country!"

The US relies heavily on its neighbors for its cars. Commerce Department data reveals that the US imports over 2.3 million cars annually from Mexico. Of all US trade over the first three quarters, Mexico accounts for nearly 16%, while Canada is 14.5%. Business Insider previously detailed the exact car brands and models that could be most heavily impacted.

Trump is also expected to cut the $7,500 tax credit for EV purchases included in President Joe Biden's Inflation Reduction Act, which would likely reduce EV sales.

Both Mexico's President Claudia Sheinbaum and Canada's Prime Minister Justin Trudeau have spoken against the tariff proposals.

Sheinbaum suggested Tuesday that Mexico may impose its own tariffs on the US, adding Mexico has been hurt by the smuggling of drugs and weapons from the US.

Trudeau on Friday said the tariffs would have negative impacts on both Canadians and Americans.

"Our responsibility is to point out that he would not just be harming Canadians, who work so well with the United States, but he would actually be raising prices for Americans citizens as well and hurting American industry and business," Trudeau said.

• President-elect Donald Trump has threatened to slap tariffs on goods from Mexico, Canada, and China.
• Tariffs raise money but may also affect prices and employment, and they can lead to trade wars.
• Here's a guide to tariffs, including who pays them, how they work, and how they affect the economy.

Tariffs are back in the spotlight after President-elect Donald Trump pledged to impose 25% tariffs on goods from Mexico and Canada and an additional 10% duty on goods from China, unless those countries stop the flow of illegal immigration and narcotics into the US.

Trump's tariff threat could be a negotiating ploy to win better terms with America's three biggest trading partners. But if the tariffs are imposed, they could affect prices, employment, and the broader US economy — especially given the risk that China, Canada, and Mexico may retaliate with tariffs, triggering a trade war.

Here's what you should know about tariffs and why they matter.

What are tariffs?

A tariff is effectively a government tax specifically levied on foreign goods imported into a country.

Tariffs date back more than 200 years and were historically used by authorities to raise money. The US government collected most of its revenue from tariffs before introducing an income tax in the early 1900s.

Authorities now use tariffs primarily to protect domestic industries from foreign competition and punish trading partners for bad behavior.

There are four types of tariffs:

• An ad valorem tariff is calculated based on the value of the good. If an imported product is worth $10 and the tariff is 10%, the importer has to pay $1.
• A specific tariff is imposed on a per-unit basis, so the value of the item doesn't matter. An importer might have to pay $1 for every pound of cocoa beans it brings into the country, whether it brings in 10 bags or 1,000.
• A compound tariff combines elements of ad valorem and specific tariffs. The tariff on an imported item could be $1 per pound or 5% of its value, depending on which generates more revenue.
• A mixed tariff applies both an ad valorem and a specific tariff, meaning an importer might have to pay $5 a pound and 10% of its value as well.

Who pays tariffs? How do they work?

The news that Trump threatened Canada with tariffs, along with Mexico and China, has made it important to understand who pays tariffs and how they work.

In the US, the simple answer is that the person or business importing the tariffed product into the US pays the tariff, and the money is paid to the US Treasury.

For example, if General Motors imports parts from its factories in Mexico and assembles its cars in the US, it would have to pay tariffs to bring in those parts.

Customs and Border Protection agents collect tariffs at 328 ports of entry, including docks, airports, and border crossings.

How do tariffs affect prices and the economy?

Tariffs raise costs for importers, and to protect their profit margins, importers typically pass on those costs by charging higher prices to their domestic customers — whether they're companies or consumers.

Those price hikes can benefit domestic producers because the hikes make their goods relatively cheaper to bring to market than imported alternatives. For example, they might make it easier for US apparel manufacturers to compete with Chinese fast-fashion companies such as Shein and Temu.

Tariffs can also spur foreign producers to drop their prices to try to keep their products competitive, hurting their domestic industry and their country's economy, and partly offsetting the upward pressure on prices from tariffs.

The countries involved may also trade lower volumes of the product if both supply and demand fall in response to the tariffs.

A 2019 research paper on the initial impact of Trump's first-term tariffs found they fully passed through into the domestic prices of imported goods — and hurt consumer choice by reducing the availability of imported varieties.

Tariffs are frequently pitched as a tool to protect domestic jobs. A National Bureau of Economic Research working paper published in January found that the 2018-2019 trade war did not affect employment in newly protected sectors. The study also found that retaliatory tariffs from other countries contributed to job losses in domestic sectors such as agriculture and were only partly mitigated by federal subsidies.

Advantages of tariffs can include stronger domestic industries, increased government revenue, and pressure on other countries to stop unfair trading practices and help address issues such as illegal immigration and the drug trade.

Disadvantages can include tariffs' effects on consumers in terms of higher prices and reduced choice, plus the risk of retaliatory tariffs that could lead to employment losses in some industries and a full-blown trade war.

Moreover, a study published in The Economic Journal in 2021 found that retaliatory tariffs "disproportionately targeted more Republican areas," suggesting they were aimed at Trump's base to try to maximize their political power.

How Trump's tariff plan would work

Trump is no stranger to using tariffs. He called himself "Tariff Man" during his first term for imposing tariffs on products such as steel and aluminum plus a wide range of Chinese goods.

He replaced the North American Free Trade Agreement with the United States-Mexico-Canada Agreement in his first term, allowing most goods to continue freely passing between those countries.

That would change if Trump goes ahead with sweeping tariffs on Mexican and Canadian goods. Products passing into the US from its northern and southern borders would be subject to duties, and the money collected would flow to the US Treasury.

A key question is whether the tariffs would result in higher inflation. Inflation, or the annualized pace of price increases, hit a 40-year high of more than 9% in 2022, spurring the Federal Reserve to raise interest rates from nearly zero to above 5% in less than 18 months.

Inflation has dropped below 3% in recent months, freeing the Fed to begin cutting rates. The question is whether Trump's tariffs would cause price growth to accelerate again and delay further rate cuts — especially as people's deep concerns about higher living costs was a key reason they reelected him.