Trump considers pausing auto tariffs as world economy endures whiplash

Washington | President Donald Trump on Monday suggested that he might temporarily exempt the auto industry from tariffs he previously imposed on the sector, to give carmakers time to adjust their supply chains.

“I'm looking at something to help some of the car companies with it,” Trump told reporters gathered in the Oval Office. The Republican president said automakers needed time to relocate production from Canada, Mexico and other places, "And they need a little bit of time because they're going to make them here, but they need a little bit of time. So I'm talking about things like that.”

The statement hinted at yet another round of reversals on tariffs as Trump's onslaught of import taxes has panicked financial markets and raised deep concerns from Wall Street economists about a possible recession.

When Trump announced the 25 per cent auto tariffs on March 27, he described them as “permanent.” His hard lines on trade have become increasingly blurred as he has sought to limit the possible economic and political blowback from his policies.

Last week, after a bond market sell-off pushed up interest rates on US debt, Trump announced that for 90 days his broader tariffs against dozens of countries would instead be set at a baseline 10 per cent to give time for negotiations.

At the same time, Trump increased the import taxes on China to 145 per cent, only to temporarily exempt electronics from some of those tariffs by having those goods charged at a 20 per cent rate.

“I don't change my mind, but I'm flexible,” Trump said Monday.

Trump's flexibility has also fuelled a sense of uncertainty and confusion about his intentions and end goals. The S&P 500 stock index was up slightly in Monday afternoon trading, but it's still down nearly 9 per cent this year. Interest rates on 10-year US Treasury notes were also elevated at roughly 4.4 per cent.

Carl Tannenbaum, chief economist for the Northern Trust global financial firm, said the whiplash had been so great that he might have to “get fitted for a neck brace.”

Tannenbaum warned in an analysis: “Damage to consumer, business, and market confidence may already be irreversible.”

The US president also said that he spoke with Apple CEO Tim Cook and “helped” him recently. Many Apple products, including its popular iPhone, are assembled in China.

The Trump administration has suggested that its tariffs had isolated China as the US engaged in talks with other countries.

But China is also seeking to build tighter relationships in Asia with nations stung by Trump's tariffs. China's leader, Xi Jinping, on Monday met in Hanoi with Vietnam's Communist Party General Secretary To Lam with the message that no one wins in trade wars.

Asked about the meeting, Trump suggested the two nations were conspiring to do economic harm to the US by “trying to figure out how do we screw the United States of America.”