The White House still plans to implement 25% tariffs on imports from Canada and Mexico next week, at least for now — despite comments from President Trump on Wednesday that raised hopes of another delay.

Why it matters: The Trump administration has announced a slew of tariffs that could take effect on their respective deadline, or ultimately be pushed off — a prime backdrop for confusion.

The intrigue: That confusion was on full display in the immediate whipsaw in financial markets.

• The prospect of another delay for the 25% tariffs outlined in a White House executive order earlier this month — which had already been paused for 30 days — sent the U.S. dollar sharply lower against the Canadian dollar and Mexican peso, before recovering.

Catch up quick: Trump told reporters on Wednesday that the 25% tariff on imports from North American allies would take effect on April 2.

• Commerce Secretary Howard Lutnick quickly added that the "big transaction" would be April 2, but the "fentanyl-related" tariffs would be re-evaluated at the end of the 30-day pause on March 4.

Context: April 2 is the deadline for reciprocal tariffs that Trump previously announced, a senior White House official clarified to Axios.

• That official added that the 25% tariffs specific to Canada and Mexico were still on pause until next week, as originally thought. The administration has not made a decision whether to extend that pause or not.
• Lutnick told reporters that the Canadian and Mexican officials had to "prove to the president" that they had made progress on tighter border controls.

What to watch: The Commerce Department was previously ordered to draw up plans to impose tariffs on nations that the administration decides has unfair trading practices, a report due on April 1.

• That would allow Trump to put any tariffs in place the following day. Canada and Mexico could get hit in this order, too.

That is separate from another order that raises tariffs on all steel and aluminum imports to 25%, set to take effect on March 12.

• Trump said Tuesday that the Commerce Department would investigate whether to slap tariffs on copper imports.
• Trump on Wednesday told reporters that the administration was also looking into tariffs on European imports, particularly autos — though it was unclear if that was a new announcement or would come with the pending Commerce study.
• He's also hinted at future tariffs on semiconductors, pharmaceuticals, cars and lumber, but without setting any dates.

The bottom line: So far the Trump administration has implemented, not just announced, tariffs of 10% on all imports from China.

• If the administration makes good on some or all of its other tariff threats, keeping up with Trump trade policy might get that much harder.

The Commerce Department will investigate whether to slap tariffs on imports of copper, the latest manufacturing component — on top of aluminum and steel — to be swept up in the Trump administration's trade crackdown.

Why it matters: The White House on Tuesday said the billions of dollars worth of annual copper imports threaten national security, given the metal's critical role in the buildout of military vehicles, aircraft and more.

What they're saying: "Tariffs can help build back our American copper industry, if necessary, and strengthen our national defense," Commerce Secretary Howard Lutnick said in a statement given to reporters.

• "American industries depend on copper and it should be made in America. No exemptions, no exceptions."

Yes, but: The U.S. exported more copper, in dollar terms, than it imported in 2024 — a sign that the Trump administration is not just targeting materials where there is a trade imbalance.

• Last year, the U.S. exported $11 billion worth of copper, while it imported about $9.5 billion worth of copper from foreign nations, according to Commerce Department data released earlier this month.

What to watch: Trump's order on Tuesday takes no definitive action. Instead it marks the beginning of a Section 232 investigation that may (or may not) end with a recommendation to put a certain tariff rate on copper imports.

• These investigations have historically dragged on for years, but White House senior trade advisor Peter Navarro told reporters this process will move faster.
• "You will see that our new Secretary of Commerce will move in what I like to call 'Trump time,'" Navarro said, though he offered no timeline for the investigation.

The bottom line: Copper is the latest on a growing list of potential tariff targets that may or may not ultimately face import taxes.

• The uncertainty around trade policy is weighing on sentiment. Surveys by the University of Michigan and the Conference Board show consumers are worried that tariffs will push up prices.

The new administration's policies appear to be weighing on purchasing plans, hiring intentions and hopes of lower inflation, according to recent survey data.

Why it matters: In the immediate aftermath of the election, markets rallied and businesses celebrated the dawn of a friendlier era for regulation. Now, tariff threats look to be putting a dent in the economic outlook of consumers and businesses.

• It's likely that signs would first appear in key surveys of businesses and shoppers — though it is still early and the pandemic recovery exposed the flaws of these measurements.

The big picture: Excitement about potential Trump-era deregulation and tax cuts drove consumer and executive sentiment higher right after the election. Now fears about trade war fallout might overshadow those business-friendly policies.

• The University of Michigan's measure of consumer sentiment fell about 10% this month relative to January, the second consecutive decline.
• Buying conditions for large-ticket items plunged almost 20% in February, a sign that consumers anticipate tariff-related price increases.
• Meanwhile, expectations for inflation in the year ahead surged a full point to 4.3%, above the range seen in pre-pandemic times.

What they're saying: "Consumers broadly anticipate that tariff hikes will lead to higher inflation, but policy uncertainty means that their views are subject to change," UMich's Joanne Hsu said in a statement, adding that 40% of consumers surveyed spontaneously mentioned "tariffs" — up from 27% last month.

They're not alone in their anxiety: Small businesses — the economy's biggest hiring machine — are marking down capital investment plans, according to an index from the National Federation of Independent Business, a lobbying group.

• Headline sentiment remains above the historical average, but a measure of uncertainty is the third-highest on records going back almost 40 years.

S&P Global's preliminary purchasing managers' indices suggested a sharp slowdown.

• An output index across goods and services fell 2.3 points in early February to the lowest in 17 months, signaling "a steep deceleration in the pace of economic growth over the past two months from a buoyant rate seen late last year," according to a statement.
• Companies said "tariffs were widely cited as a key cause of higher prices in the manufacturing sector."

Of note: "Despite fearmongering by Democrats and the media over President Trump's trade policies — that did not drum up inflation during his first term — the Trump administration remains committed to delivering economic relief for everyday Americans and restoring American Greatness," White House spokesperson Kush Desai tells Axios.

Surveys of businesses and consumers may have become less reliable as early indicators of how the economy will perform in this highly polarized age.

The intrigue: In the Biden era, there was a mismatch between tanking sentiment and strong economic activity — a factor that might have been influenced by politics. That phenomenon may extend into the Trump years.

• For instance, depressed sentiment and higher inflation expectations in February were concentrated among Democrats and independents, according to UMich.
• UMich's sentiment index dropped 14 points among Democrats and roughly half as much for independents.
• Among Republicans, sentiment held at the highest level since the 2020 election. Democrats' sentiment hasn't been this low since April 2020.
• "Consumers are feeling gloomier, but the post pandemic economy has taught us attitudes don't always drive spending decisions," Nationwide financial market economist Oren Klachkin wrote in a client note.

Between the lines: More and more surveys about economic conditions appear not to offer independent information about peoples' plans to spend money or buy a car, but rather whether they do or do not like the person in the White House.

The bottom line: Survey-based data offer early warning signs of trouble, but it's what people do, not what they say, that will determine how the Trump economy turns out.

The Elon Musk-led DOGE's latest update on an accounting of its cost-cutting measures to date raises more questions than answers: It didn't take long before at least one major error was identified in its receipts.

Why it matters: There is uncertainty about the accuracy of the self-reported audit that could, in theory, make DOGE's moves across the federal government more transparent.

• There are already concerns about the agency's access to databases and private data typically reserved for career staffers.

The big picture: The DOGE website said it canceled a contract for the U.S. Immigration and Customs Enforcement agency — for "program and technical support for the office of diversity and civil rights" — that was purportedly worth $8 billion.

• That is a big contract that alone would all but use up ICE's $9 billion budget.
• The contract was actually worth $8 million, as the New York Times and other publications have pointed out.

The intrigue: DOGE claims that its "total estimated savings" to date are roughly $55 billion. But there are questions about whether that sum is inflated. Bloomberg says the website lists $16.6 billion in savings.

Between the lines: The website accounts for the face value of a contract but does not seem to account for funds that are spread across several years. If some of the money has already been spent, that is money that is not technically "saved."

It is also unclear how cuts in one area might affect government revenue in another.

• Take layoffs at the Internal Revenue Service — rumored to begin as soon as today — that could result in fewer tax collections.
• The Biden administration made the opposite bet: bulking up IRS staff would result in higher collections.

💭 Our thought bubble, from Axios' longtime Musk-watcher Joann Muller: Musk's accounting of the litany of accomplishments at DOGE shares a similar lack of specificity with Tesla investor calls.

• He boasts about sales volumes going up or costs going down, for example, but provides very few numbers. Musk makes confident predictions about "orders of magnitude" growth rates that are "insane," with very little to support those claims.
• It's up to investors to dig into Tesla's SEC filings — or, in this case, whatever data DOGE makes public — to get the details.

Federal Reserve officials said shifts in trade and immigration policy are among the factors that could derail inflation progress, according to minutes from the central bank's latest policy meeting released on Wednesday.

Why it matters: After two years fighting inflation, progress on cooling prices has stalled. The policies at the heart of President Trump's economic agenda — high tariffs and a crackdown on undocumented immigration — could risk a more bleak inflation outlook.

What they're saying: At the Fed's policy meeting, held Jan. 28-29, some officials called out factors that have "the potential to hinder the disinflation process, including the effects of potential changes in trade and immigration policy, as well as strong consumer demand," the minutes show.

• The minutes acknowledge that a number of businesses had indicated to some Fed officials that they "would attempt to pass on to consumers higher input costs arising from potential tariffs."

The big picture: President Trump has threatened (and in the case of China, put into place) across-the-board tariffs on imports from countries the administration determines has unfair trade practices.

• Trump has also issued a slew of executive orders since taking office aimed at cracking down on immigration.

Flashback: Fed chair Jerome Powell has said that higher immigration rates in recent years had helped close the gap between the high demand for workers and the supply of people available to fill them.

• The Fed no longer sees the labor market as a source of inflation, as the minutes showed.

Catch up quick: The Fed kept interest rates on hold at the conclusion of its meeting last month, buying more time to assess how inflation evolves in the months ahead.

• Data since that meeting showed 2025 kicked off with hotter-than-expected price pressures.
• Market-based odds published by the CME show overwhelming bets that the Fed keeps rates steady through June.

What to watch: Fed officials have cited heightened uncertainty around the economy, which has so far stayed healthy.

• But gaming out the impact of Trump's policies — trade, immigration, taxes and more — and how the mix of them nets out for inflation and growth is difficult.
• For instance, Fed officials also cited some upside risks to the economic policy, including a "potentially more favorable regulatory environment for businesses," the minutes show.

Europe faces two great crises — in the economic and security spheres — that are, ultimately, two sides of the same coin.

Why it matters: Europe has experienced subpar economic growth for a generation, and has underinvested in its own defense. Both problems are coming to a head, with the Trump administration's hostility as the catalyst.

• After decades of underinvestment and sluggish productivity, Europe faces receding U.S. security commitments, new tariffs on its exports, and a regulatory environment that puts domestic companies in a regulatory straightjacket.
• European elites are increasingly acknowledging that a lack of competitive fire, in both the economic and national security arenas, has resulted in overdependence both on U.S. companies to drive innovation and the U.S. government to defend Europe from Russia.

The intrigue: In a high-profile speech in Munich, European Commission president Ursula von der Leyen described a new world — one in which there is a heightened focus on geopolitical conflict and economic security.

• Von der Leyen proposed loosening the continent's fiscal rules to boost defense spending and protect member countries from possible threats from Russia — a rare move, last exercised at the COVID-19 pandemic's onset.
• "I believe we are now in another period of crisis which warrants a similar approach," Von der Leyen said.

Mario Draghi, the former European Central Bank president and Italian prime minister, said EU policies have strangled the economy more than the U.S. tariffs could.

• In an op-ed in the Financial Times on Friday, Draghi wrote that the EU has failed to address supply and demand issues caused by tough regulatory policy and depressed government investment. "Both these shortcomings — supply and demand — are largely of Europe's own making. They are therefore within its power to change."
• "Up to now, Europe has focused on either single or national goals without counting their collective cost," Draghi wrote.
• "But it is now clear that acting in this way has delivered neither welfare for Europeans, nor healthy public finances, nor even national autonomy, which is threatened by pressure from abroad," he continued. "That is why radical change is needed."

What to watch: In an extensive report on the EU's troubles, Draghi backed the idea of the continent borrowing as a whole for economic investment.

• "There are two very large systemic challenges coming down the pike," Heidi Crebo-Rediker, a senior fellow at the Council on Foreign Relations and former State Department chief economist, tells Axios.
• "It might be easier for Europe to negotiate on tariffs than to agree on a collective borrowing mechanism for the sheer amount of spending they need for their national security in as short an amount of time as possible," she adds.

A breakdown in the relationship between Europe and the United States, which has moved with breathtaking speed, is accelerating the recognition of long-developing economic problems.

Catch up quick: U.S. officials — including Secretary of State Marco Rubio — are in Riyadh, Saudi Arabia, to meet with Russian officials about the future of Ukraine. These are the first such talks since Russia's 2022 invasion.

• Absent from the talks over the continent's future are Ukrainian and European leaders, the latest blow in a recent series of events that dented U.S.-EU relations.
• President Trump has long claimed that the U.S. carried too much of the NATO burden in relation to EU countries. Last week, the administration all but said EU countries should not count on America for security.

Between the lines: In recent months, Europe's economic powerhouses have been in the midst of political chaos over budget disputes that, at least in one case, spooked the bond market.

• Germany, its largest economy, will hold an election in the coming days after different visions of how to ignite growth led to a government collapse.
• It is symbolic of Europe's already dismal economic reality — aging populations that will lead to a shortfall of workers, for instance — that now needs to adjust to higher defense spending demands.

The bottom line: "You're looking at a world where there is more uncertainty and the distance between peace and war is shorter," Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, tells Axios.

• "Europe needs a completely different industrial model but that takes time," Vistesen adds.

The Trump trade war has blown past the realm of tariffs. The White House plans to hit back at any measure undertaken by trading partners that it believes disadvantages U.S. exporters.

Why it matters: The Trump administration is ushering in a new era in which trade policy is managed country by country, using sweeping tariffs as the tool to address what officials call unfair trade dynamics.

• It will factor in trading partners' behavior that is outside the traditional confines of trade policy, including whether they fund their government with a value-added tax and how they manage their currency.
• It risks blowback on the U.S. if the nation is seen around the world as meddling in other countries' domestic policies.
• With such widespread tariffs, higher U.S. inflation is a risk.

What they're saying: "This really was an expansion of what has been seen as an unfair trade barrier, particularly related to taxes," Everett Eissenstat, a former official in the U.S. Trade Representative Office during Trump's first term, tells Axios.

• "You have tariffs being used to offset discriminatory tax policy — that's a pretty big shift," Eissenstat adds.

Yes, but: It comes with economic and strategic risks.

• "Take a country like India, where they have very high tariffs and we have very low tariffs: Are we going to raise all of our tariffs for India to those levels, even if that means we're going to be paying higher prices?" Wendy Cutler, a vice president at the Asia Society Policy Institute, tells Axios.
• "I don't think that's good policy," she says.

How it works: The tariffs won't take effect until early April, assuming they move forward at all.

• Over the next 100 days, the Commerce Department and the U.S. Trade Representative Office will calculate custom tariff plans for all trading partners with "non-reciprocal trade relationships," according to a memo President Trump signed Thursday.

Between the lines: There is a wide scope for how the White House defines such a relationship, which includes all tariff and non-tariff measures.

• The White House calls out nations with higher tariffs on U.S. products. It includes any nations that have devalued their currency or subsidized goods and any other practice that officials say "imposes any unfair limitation on market access," the memo says.

The intrigue: Speaking in the Oval Office, Trump called out the value-added tax (VAT) as "more punitive" than tariffs — opening the possibility for a trade war with Europe, where such taxes are common.

• The VAT applies to all goods (domestic or imported) across the trade bloc — a tax many economists don't assess as being particularly harmful to U.S. exporters.

The big picture: No country — ally or adversary — is immune.

• A White House fact sheet calls out motorcycles: India has a 100% tariff on U.S. motorcycles, while there is a 2.4% tariff on Indian-made motorcycles.
• The fact sheet mentions a "digital service tax" imposed by Canada and France, plus higher tariffs on cars imported from Europe.

What to watch: The planned tariffs might spur a series of bilateral talks that pull back the tariff threats — an outcome Trump suggested while he met with Indian Prime Minister Narendra Modi on Thursday.

• But there is a possibility the tariffs could linger — a risk for the economy with inflation that looks harder to beat.
• "The challenge is that this stuff is inflationary and it is disruptive. I think this economy is more jittery than the one we had in 2017," says Evercore's Sarah Bianchi, a former trade official under President Biden.

President Trump directed top trade officials to study retaliatory tariffs on global trading partners that have steep import duties on U.S. goods, a process that could take several weeks to complete.

Why it matters: It threatens a historic attack on global trade norms to address what Trump has deemed unfair imbalances, but also leaves room for the White House to strike deals that might ultimately avert tariffs.

• It reignites "will he, won't he" trade uncertainty, leaving companies guessing.

The intrigue: What looks like an opening salvo might be an effort to extract what the White House considers more favorable trade conditions, though Trump said on Thursday that the tariffs would help raise government revenues.

• Early calculations by one Wall Street analyst show the reciprocal tariffs would raise "minimal" revenue for the U.S.
• Commerce Secretary nominee Howard Lutnick said the study might be ready by April 1, and Trump could move to impose tariffs thereafter. Lutnick added countries might also lower their tariffs, which would cut costs for consumers.

The details: Trump's reciprocal tariffs would apply to foreign nations that charge higher tariffs on U.S. goods than the U.S. charges on the foreign nation's goods.

• There was no detail on which countries will be subject to the tariffs or if they will be limited to specific products. There was also no word on when the tariffs will definitively take effect.
• A factsheet released by the White House calls out a few examples, including India's tariffs on U.S. motorcycles and Brazil's tariff on ethanol.
• Targeting those countries' exports to the U.S. could affect the prices of a wide variety of goods, from paper and coffee to diamonds and cars.
• "Prices could go up somewhat short term, but prices will also go down," Trump said during a press conference in the Oval Office.

What to watch: Trump said the administration would consider Europe's value-added tax "to be the same as a tariff," raising the prospect of a trade battle with the continent.

• He also said he expects tariffs to raise a "staggering amount" of revenue.

Inflation surged ahead to start 2025, crimping Americans' buying power and serving as a warning to policymakers — whether those contemplating new tariffs or further interest rate cuts — that price pressures are not yet vanquished.

Why it matters: Economic policymakers have described the disinflation process as a bumpy road. The past six months instead look like an uphill path.

• Prices flatlined last summer but have risen at a 4.5% annual rate over the last three months, far above the Fed's goals and the highest since fall 2022.

What they're saying: "There's a déjà vu element here — 2024 also started with a few hot inflation prints that forced a big reassessment of rate-cutting expectations," JPMorgan Wealth Management's Elyse Ausenbaugh wrote in a note.

• "No matter how you slice the data, the January [Consumer Price Index] print marks an unwelcome re-acceleration in prices to start off 2025," Jason Pride, chief of investment strategy and research at Glenmede, wrote Wednesday morning.

By the numbers: For consumers, the report might just quantify what they have experienced in grocery stores — especially in the egg aisle, where prices rose 15% in January, with a 53% price gain over the past year.

• The CPI's overall monthly gain was the largest since the summer of 2023, pushed up in part by the biggest rise in grocery prices in almost three years.
• There were also outsized price increases in January for used vehicles (up 2.2%), prescription drugs (2.5%), hotels (1.7%) and auto insurance (2%).

Between the lines: Core CPI, excluding volatile food and energy, also moved in the wrong direction, ticking up 0.4% in January.

• On a three-month annualized basis, core CPI rose 3.8%, the highest since last April.

The report has at least one silver lining: Shelter inflation is much less alarming, with the overall index up 4.4% over the last year. That's the smallest 12-month gain in three years.

• Rents rose 0.3% for the second straight month, while owners' equivalent rent — how much it would cost homeowners to rent their own homes — rose by a similar amount.

Yes, but: Inflation data can be volatile in January, when companies tend to implement price increases.

• Even so, further progress on inflation has been stalling for months.
• The seasonal adjustment process may be exaggerating January inflation, due to the lingering effects of earlier inflation surges on the adjustment process.
• The economic backdrop, however, remains favorable: The labor market is strong with steadily rising pay — an outcome that has kept consumer spending strong.

Inflation moved higher in January: The Consumer Price Index rose 0.5%, while a measure that strips out energy and food rose 0.4%, the Labor Department said on Wednesday.

Why it matters: It's a warning to the White House and the Fed about inflation's potential staying power across the economy.

• CPI rose 3% in the year through January, compared to the 2.9% increase in December.
• Core CPI, which excludes food and energy, rose 3.3% over the last 12 months, up from 3.2% the prior month.

The big picture: Inflation progress has been bumpy in recent months, with much uncertainty about how White House policy — including tariffs — might weigh on prices.

• Any tariff effects would not be evident in this report; the 10% tariff on China went into effect in February, as did retaliatory measures.
• The CPI report is compiled throughout the month. The January report covers the final weeks of President Biden's time in office and the early days of the Trump administration.

What to watch: Federal Reserve chair Jerome Powell, who will appear before Congress again on Wednesday, has said the central bank is in no rush to lower interest rates further, as such uncertainties become more clear.

• "Inflation has moved much closer to our 2 percent longer-run goal, though it remains somewhat elevated," Powell told lawmakers Tuesday.

Editor's note: This story has been updated with details on when the CPI data was collected.

The North American trade drama is unfolding against a backdrop of diverging economic performance that gives President Trump leverage in the trade war.

Why it matters: The two nations are tightly linked by the trade patterns that the White House threatens to blow up.

• Canada is already on weak footing. Heightened conflict that would disentangle its economy from the U.S. would be a crushing blow.

What they're saying: "It's odd to have such a large difference in the two economies as we've seen in the last two years," Doug Porter, chief economist at BMO, tells Axios.

• The U.S. economy has grown at an annual rate of 2.8% over the last couple of years, versus 1.2% for Canada's economy.
• The unemployment rate in the U.S. is a low 4%; in Canada, it is 6.6%.

Between the lines: It looks like the U.S. economy nailed a soft landing after the inflation shock, but Canada's landing was bumpier.

• Like much of the rest of the world, Canada's central bank aggressively raised interest rates to squeeze out inflation. But Canadians felt the squeeze, and many homeowner mortgages reset in as little as three years.
• Other factors are at play: There was no productivity surge in Canada, business investment is stagnant, and the country is not benefiting from the animal spirits behind the AI boom.

The intrigue: Canadian monetary policy typically moves in lockstep with that of the U.S. But this time, it cut interest rates sooner, and at a much quicker pace relative to the U.S., to protect its economy.

• Since June, the Bank of Canada has cut rates by 2 percentage points — a full point above the Fed's cumulative cuts that are now on hold.
• "Throughout most of the past 20 years, Canada-U.S. interest rates have been fairly similar," Porter says. "It's really unusual to have such a large gap in rates, but these are unusual times."

What we're watching: Trump said he would put 25% tariffs on steel and aluminum imports, an announcement that could come as soon as Monday.

• It's unclear whether Canada — the overwhelming source of U.S. steel imports — will be subject to these tariffs, even as others remain on hold.
• If the tariffs go ahead, few nations will be impacted like Canada, which risks losing its biggest buyer if the U.S. ramps up domestic production.
• That is, at least, what the stock market is betting: Shares of steel producers are soaring.

Flashback: The tariffs have shades of 2018, when Trump imposed similar levies on steel and aluminum.

• Like the U.S., Canada was in the midst of a lengthy economic expansion. Exports of its aluminum fell almost 20% and steel exports dropped by 40%, according to a TD Bank report released this month. Canada's economy continued to grow, though at a slower rate, and unemployment and inflation stayed low.

The job market kicked off 2025 with solid hiring: The economy added 143,000 jobs in January, while the unemployment rate dropped to 4%, the Labor Department said on Friday.

Why it matters: The pace of hiring cooled from the final months of 2024, but the labor market continues to be on solid footing, which has helped the economy defy slowdown fears.

By the numbers: Friday's report also includes annual revisions of previous years' data, which showed roughly 590,000 fewer jobs added than initially estimated in 2024.

• That revision was as expected.

The big picture: The Federal Reserve kept interest rates on hold last month after successive rate cuts, citing a healthy economy and labor market that left ample time to consider what the central bank should do next.

What to watch: The pause also allows officials to monitor the economic impacts of Trump policy — including possible trade wars that could increase inflation, which would weigh on hiring and the broader economy.

• The possibility of a North American trade war looks more distant — at least for now. But China is set to retaliate with 15% tariffs on select U.S. goods starting next week, raising the stakes.

The bottom line: The labor market entered 2025 on a solid note.

• So far the economy's strength has surprised forecasters anticipating a slowdown. There are huge uncertainties about whether that dynamic will continue.

President Trump campaigned on using tariffs to revive domestic industry and fill America's coffers, but the tariff strategy now looks more muddled than ever.

Why it matters: Trump has sent mixed signals about why his administration is slapping tariffs on billions of dollars' worth of imports, sparking confusion about whether the measures are temporary threats or the new economic normal.

• A trade war is underway with China, though every instance of tariff threats before that — Colombia, Canada and Mexico — has ended with Trump backing off, following concessions on areas of policy unrelated to trade.
• The economic impact of tariffs might prove minor if they are merely a negotiating tactic to extract non-trade-related concessions. But if they become a permanent feature of U.S. policy, they'll have a more lasting impact on the economy, markets, and business decision-making.

What they're saying: "If you move the tax base onto imports, then you now need imports to generate revenue," Jason Thomas, head of global research and investment strategy at Carlyle, tells Axios.

• "But if you have tariff rates that are so high that it leads to more domestic production, well, now you can't generate revenue. These two things are not mutually consistent with one another," Thomas adds.

Catch up quick: Tariffs on most North American imports are temporarily on ice after Canada and Mexico notched a deal with Trump.

• But the 10% tariff on all imports from China took effect Tuesday morning. No product is exempted from the import tax, unlike in Trump's first term.
• Overnight, China hit back, threatening retaliatory 15% tariffs on a slew of U.S. imports, including farm machinery, coal and natural gas. It will also restrict exports of crucial minerals.
• Then there was a non-trade-related measure: Regulators in China opened an antitrust investigation into Google.

The intrigue: The White House warned that retaliation would result in stiffer tariffs.

• But China's retaliatory measures won't go into effect until next Monday. In theory, that offers a window for Trump and Chinese leader Xi Jinping to land a deal that could stave off the trade war — much like Canada and Mexico. (They are due to speak Tuesday.)

That appears to be the ideal outcome. Speaking in the Oval Office on Monday, Trump suggested the tariffs were a negotiating tactic.

• "China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," Trump told reporters.

Yes, but: Trump also returned to a regular frustration about trade deficits when defending tariffs.

• "The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we're not going to be the "Stupid Country" any longer," Trump wrote, in part, on his social media site Truth Social.
• Trump has also said tariffs would be a source of government revenue that could help pay for his tax legislation.
• "I think that there is this presumption that revenue associated with tariffs will offset some portion of those tax cuts," Carlyle's Thomas says. "As we get closer to that, we'll have to see more evidence of what really intends to be permanent, as opposed to which tariffs are more trying to shape the behavior of foreign governments."

The other side: Conservative economist Oren Cass, who has supported Trump's tariff plans, said it was clear that these were negotiating tariffs — rather than a tariff that seeks to raise revenue, decouple economies or rebalance trade deficits.

• "Think of a negotiating tariff like an embargo or a loan—an economic tool of statecraft used to advance foreign policy aims," Cass wrote in a post Monday.
• Cass, however, admitted the Trump administration's negotiation-type tariffs are unclear: "[T]he actual demands remain unclear at best," he wrote.

President Trump on Saturday imposed across-the-board tariffs on North American allies and China, which sparked immediate retaliation against domestic manufacturers.

Why it matters: After weeks of "will he or won't he," Trump opted for sweeping levies that could de-link economic ties with top trading partners. The impact on American consumers and businesses may be profound.

Zoom in: Mexican and Canadian imports are now subject to 25% tariffs — with the exception of energy from Canada, which will face 10% tariffs.

• The White House also announced additional 10% tariffs on Chinese goods — many of which already face import taxes held over from Trump's first term.

What they're saying: The White House said the tariffs, which take effect on Tuesday, were a response to an emergency threat posed by undocumented immigrants and drugs.

• The Trump administration said the tariffs would remain in place "until the crisis is alleviated."
• The executive orders include clauses that say the U.S. may "increase or expand in scope" the tariffs if the nations retaliate.

Hours after the White House orders, retaliation started: Canadian Prime Minister Justin Trudeau announced retaliatory measures that would put 25% tariffs on more than $100 billion worth of U.S. exports, including beer, food products and appliances. Some tariffs will begin to take effect on Tuesday.

• Trudeau also encouraged Canadians to buy locally-made products — skip Florida-made orange juice or Kentucky bourbon — and forego U.S. vacations.

What to watch: Business interest and lobbying groups, which have cheered Trump's expected deregulatory and tax policies, released a flurry of statements condemning the orders.

• The U.S. Chamber of Commerce, in a statement, warned the tariffs "will only raise prices for American families and upend supply chains."
• "The Chamber will consult with our members, including main street businesses across the country impacted by this move, to determine next steps to prevent economic harm to Americans."

Between the lines: The impact of the tariffs could be passed on to a wide range of everyday consumer products.

• Trump insists tariffs are not inflationary, though he conceded Friday they could cause "temporary, short-term disruption."
• The Tax Foundation estimated Friday that the proposed tariffs would effectively be a tax of $830 a year on the average U.S. household.

Case in point: Most of the U.S. supply of tomatoes, avocados and beer comes from Mexico.

• Auto parts, oil and gas are among the key Canadian exports to the U.S.

The intrigue: Trump is leaning on unprecedented authority to impose tariffs on the largest U.S. trading partners.

• The White House invoked the International Emergency Economic Powers Act, a Carter-era law that gives the president wide-ranging powers in an emergency.
• The law has never been tapped to impose tariffs and is likely to draw legal scrutiny.

The big picture: The announcement ends days of drama that left domestic industries guessing and sent financial markets reeling.

• Trump has demanded that Canada, Mexico and China curb the flow of fentanyl into the U.S. In the case of Canada and Mexico, he has demanded tighter border controls for immigration as well.
• It's unclear whether compliance with such asks would be enough to remove tariffs.

Flashback: The White House drew up a tariff plan for Colombian imports in recent days, threatening levies unless the nation agreed to accept flights carrying deported immigrants. When Colombia complied, the threats receded.

What we're watching: In effect, Trump has blown up the free-trade deal with Mexico and Canada, the USMCA, that he negotiated in his first term.

• These new tariffs set the scene for the beginnings of a new global trade war.

Editor's Note: This story has been updated with reactions to the executive order.

There is a wrecking ball coming for the norms of global trade.

• President Trump is expected to disrupt the largely friendly economic relationship between our North American neighbors with high tariffs that would blow up his own trade deal.
• He plans to up the ante on U.S.-China trade relations too and pledged more tariffs ahead.

Why it matters: Trade policy moved more slowly in Trump 1.0. The measures send a warning that this time tariffs will be broader, implemented faster and wielded to notch economic wins.

Between the lines: The trade orders expected Saturday put Trump's presidential campaign promises into motion.

• He will lean on untested powers — which might be tested in court — to impose tariffs and reshape trade in a way he believes will better serve the nation.
• Trump made a quick comment to reporters in the Oval Office Friday, one that offered an important peek into his trade war philosophy. He described putting up "a wall" to help shut out foreign competition and bring production of certain goods stateside: "The wall is a tariff wall."

The intrigue: The gamble risks damaging the economy and knocking the stock market boom off course. Then there are the unknown effects that might come from retaliatory measures.

• The expected tariffs hit 40% of U.S. imports, from avocados to auto parts to oil.
• Trump says the tariffs are a response to the incoming flow of fentanyl. In the case of Canada and Mexico, he claims insufficient control over immigrants entering the U.S.
• The tariff off-ramp is unclear; unlike Colombia, Trump said he isn't looking for concessions.

What they're saying: Trump's election win was helped by inflation-hating voters. The tariffs risk aggravating a problem he pledged to fix.

• Trump conceded "there could be some temporary short-term disruption, and people will understand that," a tacit acknowledgement that as tariffs come on, prices will rise — which he had just denied moments before.

Threat level: More than 60% of imported vegetables are from Mexico as of 2023, according to the Department of Agriculture.

• Even if a vehicle is manufactured stateside, the auto sector relies on inputs from Canada and Mexico.
• It's unclear how the higher cost of those goods will ripple through the supply chain — or if companies can adjust quick enough to skirt it.
• The Tax Foundation says tariffs on Canada and Mexico are like an additional $670 annual tax on U.S. households.

New data on Friday gives the best snapshot yet of where economic conditions stand before a potential continentwide trade war.

Why it matters: If tariffs prove disruptive to growth, the U.S. is starting from a position of strength — unlike other major economies — which might cushion the blow of tariffs better than otherwise would have been the case.

• The risk, however, is an interruption of Americans' economic gains in recent years, while making inflation a longer-term feature of the economy.

Driving the news: The latest economic data supports the narrative that the economy came into 2025 with momentum. But inflation still looked sticky, as previewed in Thursday's GDP report — a concern for the many economists who believe tariffs will make above-normal price pressures harder to beat.

• For the third month, the core Personal Consumption Expenditures Price Index — which strips out food and energy prices and is closely monitored by the Federal Reserve — didn't budge.
• It rose 2.8% in the 12 months through December, above the Fed's 2% target.
• By a different measure, however, inflation looks more benign: Core PCE rose 2.2% on an annualized basis in the previous three months, down from 2.6% in November.

Between the lines: Consumer spending was solid, rising 0.7% in December, or 0.4% in real terms.

• Still, that jump outpaced the rise in incomes: The personal saving rate was 3.8%, down 0.3 percentage point from November and the lowest level in two years.

Flashback: Fed officials were focused on preserving economic growth during the Trump 1.0 trade wars. This time, the economy is holding up, even under the weight of higher interest rates. There is also a new variable: too-high inflation.

• Fed chair Jerome Powell said at a news conference earlier this week that might play a role in how tariffs land on the economy and whether they result in price hikes.

What they're saying: "We've just come through a high inflation period, and you can argue that both ways: you can say that companies have figured out that they do like to raise prices — but we also hear a lot from companies these days that consumers have really had it with price increases," Powell said.

• "There are lots of places where that price increase from the tariff can show up between the manufacturer and the consumer," he added. "Just so many variables."

The intrigue: In a speech Friday morning, Fed governor Michelle Bowman did not mention Trump's trade threat. But she did warn about upside risks to inflation, noting that global supply chains remain "susceptible to disruption."

• Bowman raised the possibility that interest rates might not be high enough to restrict the economy and cool inflation.
• "In light of the ongoing strength in the economy and with equity prices substantially higher than a year ago, it seems unlikely that the overall level of interest rates and borrowing costs are exerting meaningful restraint," Bowman said.

What to watch: Trump is threatening to impose tariffs on a wide scale Saturday, another key difference between his first White House stint.

• Trump told reporters in the Oval Office on Thursday that he plans to move forward with 25% tariffs on Mexico and Canada. It's unclear whether they will go into effect right away or exclude any imports.
• Canadian Prime Minister Justin Trudeau says the nation will hit back.

The bottom line: Trump is at the helm of a different economy now. If his trade threats do materialize, the effects are unpredictable.

Thursday's GDP report, at first glance, points to a year-end slowdown in growth. But that's a mirage. Under the hood, there isn't much cooling underway at all.

Why it matters: America's economy continued to chug along in the final months of 2024, with few signs of wavering demand.

• The economy is not overheating but is holding in a steady state — an outcome welcomed by economic policymakers still battling inflation with huge uncertainties ahead.
• The GDP report's details "tell a more robust story that will keep the Fed wary about easing monetary policy too far too fast," James Knightley, chief international economist at ING, wrote Thursday morning in a note.

By the numbers: The economy expanded at a 2.3% annualized rate in the October to December period, backing off from the 3.1% pace in the third quarter.

• Economic growth last quarter was powered by stronger consumer spending, which added almost 3 percentage points to the headline figure as unemployment remains low and wages grow in real terms.
• Spending on goods was particularly strong, growing 6.6% from the previous quarter, the quickest quarterly pace since the pandemic recovery in 2021. Service sector spending rose 3.1%, compared to 2.8% in the third quarter.
• The housing sector showed signs of life after being crushed by higher interest rates: Homebuilding was a slight GDP boost after two straight quarters of pulling down growth.
• Businesses slowed spending on buildings, equipment and more, with activity dropping 2.2% last quarter after strong investment for most of 2024. The category is being closely watched for signs of AI-related spending.

The intrigue: A measure of economic activity that captures underlying growth dynamics — as opposed to one-off forces — shows the economy is keeping pace.

• Final sales to private domestic purchasers increased at a 3.2% annualized rate, just 0.2 percentage points below that in the third quarter.

Between the lines: Inventory destocking was a key factor holding back headline GDP growth.

• That is among the most volatile components of GDP, and appeared to reflect a surge in demand.

What they're saying: "The auto industry wasn't keeping up with demand on dealer lots, causing lower inventories at both retail and wholesale levels," Comerica chief economist Bill Adams said in a note, pointing to demand for EVs and replacement vehicles for those destroyed by hurricanes.

The bottom line: Fed chair Jerome Powell said Wednesday that central bank officials agreed they could be patient in assessing its next move, in part because the economy is in a "good place."

• Thursday's data suggests that judgment was correct.

The U.S. economy grew at a 2.3% annualized rate in the final three months of 2024, the Commerce Department said on Thursday — closing out a year of strong growth.

Why it matters: Despite some lost momentum at the end of the year, President Trump still inherits an economy expanding at a healthy clip, even as interest rates and inflation remain elevated. 

By the numbers: The fourth-quarter growth figures are a slowdown from the 3.1% rate in the previous three-month period.

• Consumer spending and government spending picked up pace, though a slowdown in business investment and a drawdown in inventories weighed on growth.
• Housing activity bounced back, after two straight quarters that the sector dragged growth down.

The big picture: Last year was yet another period that defied economists' growth expectations. But either way you measure growth last year, it was still slower than 2023.

• By one measure, annual growth increased 2.8% in 2024, a small dip relative to the 2.9% in 2023.

The big picture: The Federal Reserve took measures to loosen its grip on the economy in the second half of the year. The central bank cut rates by a full percentage point as inflation receded and the unemployment rate inched up.

• Since the Fed's initial interest rate cut, conditions have reversed. Progress on inflation has slowed and the labor market has bounced back.
• That is a key reason the Fed kept interest rates unchanged on Wednesday. Fed chair Jerome Powell said the economy was healthy and the central bank could afford to take its time in deciding its next move.
• "We see things as in a really good place for policy and for the economy," Powell told reporters at a news conference. "We feel like we don't need to be in a hurry to make any adjustments."

What to watch: Fed officials and some economists caution that huge uncertainty about Trump's policies — tax, trade and immigration — make it difficult to forecast how the economy may fare in the months ahead.

Go deeper: About that 2022 "technical recession"

Editor's note: This story has been updated with details on the GDP report.

The Federal Reserve left interest rates unchanged on Wednesday after three consecutive cuts since late last year.

Why it matters: The Fed is halting rate cuts as inflation looks more persistent, with some officials worried Trump's economic agenda might further ignite price pressures.

Between the lines: The Fed's policy statement released on Wednesday hinted that recent indicators have pointed to a bumpy process in bringing inflation down.

• The policy statement, which is closely watched for subtle changes, no longer included December's language that inflation "has made progress" toward its 2% target. The statement said only that inflation "remains somewhat elevated."
• But the policy statement suggests that Fed officials have upgraded their assessment of the labor market as hiring continues to keep pace. "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid," according to the policy statement.
• In the previous statement, the Fed said hiring conditions had "eased" and that the unemployment rate had moved up, though it remained historically low.

What they're saying: "I think policy is well positioned," Powell said in his post-statement news conference, noting that the unemployment rate has been "broadly stable now for six months" and inflation falling.

Driving the news: The Fed's decision leaves interest rates at a range of 4.25% to 4.5% — higher than the ultra-low borrowing costs that preceded the pandemic but roughly a full percentage point below last year's peak rates.

• The decision was unanimous. Two separate officials dissented in September and December.

The intrigue: The rate decision is the first since the inauguration of President Trump, who initially nominated Fed chair Jerome Powell in 2017.

• Fed officials last month projected they would cut rates twice in 2025, half as many cuts as previously estimated.
• Those projections also showed inflation remaining elevated for a longer period — a result some Fed officials expect to come from Trump's deportation and tariff policies, according to minutes from the central bank's December policy meeting.

What to watch: The decision sets up renewed criticism of the Fed from the White House, which dates back to Trump's first stint in office.

• Speaking virtually at the World Economic Forum, Trump said he would demand that the Fed lower interest rates — a threat that undermines the central bank's political independence.
• Asked about Trump's demand, Powell did not directly address his comments, saying "I'm not going to have any response or comment whatsoever on what the president said."
• Powell did say he has had no contact with Trump.

Go deeper: What to know about Trump's ability to move interest rates

Editor's Note: This story has been updated to add the Fed's news conference.

Expect the Fed to do its best to stay out of the headlines Wednesday, as the central bank is set to pause its interest rate cutting and start a waiting game to see where things go next.

Why it matters: The outlook is cloudy, with inflation proving stubborn and the impact of President Trump's immigration and trade policies uncertain.

• It puts the Fed in a tricky position: Officials don't want to be seen as commenting on White House decisions, but also are charged with guiding an economy that will be shaped by them.
• Trump has revived familiar calls for the Fed to lower rates, but chair Jerome Powell will likely seek to emphasize the central bank's attention to data as a driver of its decisions, rather than the president's words.

What they're saying: "The impression will be that it may well require an extended time-out through June before the fog clears and the Fed has the visibility it needs to consider a further cut," Evercore ISI's Krishna Guha wrote in a note.

• Powell, he wrote, "will continue to try to frame the debate mostly in terms of what we are learning from the data rather than Trump shocks, when we all know that the shocks are the main source of uncertainty."

Driving the news: Trump's spat with Colombia over the weekend shows the fast-changing nature of economic policy in the White House.

• For a few hours Sunday, it looked like the first victim of Trump-era tariffs would be a long-standing Latin American ally. The standoff ended when the country's president agreed to accept planes carrying migrants.

The intrigue: The episode offers some insight into how Trump 2.0 thinks about tariffs — and why attempts to model trade war economic impacts might be futile.

• Trump showed he is willing to use one economic policy (tariffs) to enforce another (deportation) — even if that country has a trade surplus with America.
• But that threat never ultimately materialized, though the White House said it would keep the draft order to invoke tariffs on hand.

What to watch: The Fed won't publish new economic projections at this week's meeting, but one key question is how the outlook has shifted — if at all — since last month.

• Minutes from December's meeting showed officials were concerned that trade and immigration policies would stoke inflation and potentially prevent the Fed from cutting rates further.

The bottom line: If Powell gets his way, this might be the least newsy press conference we have seen in a while.

• "We expect him to be as diplomatic as is possible, while firmly committing to Fed independence," Ajay Rajadhyaksha, an economist at Barclays, wrote in a note.