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- This week in Trumponomics: More tariff tantrums</p>
<p>Rick NewmanJuly 12, 2025 at 3:49 PM</p>
<p>Tariff Man isn't chickening out.</p>
<p>Investors knew something important had to happen around July 9, the deadline President Trump set for dozens of nations to make trade deals with the United States — or else. Trump has threatened double-digit "reciprocal" tariffs on imports from most US trading partners unless they make major concessions, such as committing to buy more American stuff.</p>
<p>Trump had already delayed those reciprocal tariffs once, back in April. So a prevailing expectation was that Trump would let the deadline slide again, and maybe again after that, with the reciprocal tariff threat losing its power as it became apparent Trump was willing to brandish the weapon but not actually use it.</p>
<p>That's not quite what happened. Trump did delay the July 9 deadline, this time until Aug. 1. But he also surprised markets with new tariff threats that interrupted a run of record high closes on Wall Street and sent markets sideways. The overall cost of tariffs Trump has actually imposed, meanwhile, continues to drift higher.</p>
<p>Trump's latest scheme involves sending letters to various countries telling them what their new tariff will be and then posting the letters on social media for all to see. The new tariffs kicking in on Aug. 1 will range from 20% to 40% for some two dozen countries, including Japan, South Korea, and Indonesia. The tariff will be higher for goods transshipped to the United States through a third-party country. Other negotiations are dragging along with Vietnam, India, and the European Union.</p>
<p>Read more: What Trump's tariffs mean for the economy and your wallet</p>
<p>That was the more-or-less expected part.</p>
<p>The unexpected part includes a new 50% tariff on imports from Brazil, which Trump threatened to impose unless the government stops prosecuting former president Jair Bolsonaro, a Trump buddy and political ally. Trump also announced a new 50% tariff on imported copper and said there could be a new tariff on imported pharmaceuticals as high as 200%. Then came another letter saying the tax on some Canadian imports could jump from 25% to 35%. In two more letters published on July 12, Trump brandished 30% tariffs on imports from Mexico and the European Union.</p>
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<p>Got all that?</p>
<p>Almost nobody does. But the Yale Budget Lab is keeping score, and it estimates that all of the early July changes will raise the effective tax on imports from 15% to nearly 19%. When Trump came into office, the average import tax was just 2.5%.</p>
<p>Bullish investors want to believe that "Trump always chickens out," the TACO meme that caught on in May after Trump backtracked on some of his tariff threats. But the meme is wrong. If Trump always chickened out, then the average tariff rate would be headed back toward the 3% range, and that's not going to happen.</p>
<p>"Markets should not dismiss Trump's latest statements," Evercore ISI advised in a recent note. "The next actual moves on tariffs are likely to be up. Tariffs remain a preferred policy tool for the President to deal with a broad range of issues."</p>
<p>Don't underestimate tariff man: President Trump and first lady Melania Trump arrive on Air Force One at Kelly Field air base in San Antonio, Texas, en route to observe flood damage in Kerrville, Texas, on July 11. (AP Photo/Jacquelyn Martin) ()</p>
<p>Read more: 5 ways to tariff-proof your finances</p>
<p>For all the market gyrations, the effects of Trump's tariffs have barely shown up in the real economy. Some analysts think they're about to make an entrance, however. Companies are about to start reporting second quarter earnings, providing updates on costs and supply chains after the bulk of Trump's tariffs went into effect in March and April. Companies have learned to downplay price hikes caused by the tariffs, lest Trump retaliate. But they do have to be fairly transparent with shareholders and analysts, who have a right to know about company finances.</p>
<p>Economists will scour the July 15 inflation report for signs of tariff price hikes in clothing, electronics, autos, auto parts, appliances, and other products already subject to tariffs. Most economists still expect the tariffs to push the overall inflation rate from 2.3% now to around 3.5% or maybe 4% by the end of the year. That, in turn, is preventing the Federal Reserve from lowering interest rates, which is why Trump keeps attacking Fed Chair Jerome Powell — even though Trump's own trade policy is the very thing preventing the Fed from cutting.</p>
<p>The real message Trump is now sending on tariffs is that this vortex of madness may continue indefinitely.</p>
<p>Trump has learned that he has an almost unfettered ability to dial tariffs up and down, to reward friends, punish enemies, pursue pet causes, and just keep himself in the headlines. Markets are a secondary concern, and maybe not even that. The next trade deadline will probably bring more unsettling surprises, because Trump doesn't want calm. He wants leverage he can hold over everybody — always.</p>
<p>Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.</p>
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