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Investing.com - Tariffs introduced this week by U.S. President Donald Trump are "just the beginning" of a total break from traditional Washington thinking on free trade and multilateralism, a former official in Trump’s first term told analysts at Jefferies.
Earlier this week, Trump went forward with steep 25% tariffs on imports from Mexico and non-energy items from Canada, and doubled duties on goods incoming from China to 20%. Trump has claimed that these countries, which make up over 40% of total U.S. imports, have not done enough to help stem the flow of the illegal drug fentanyl and migrants into America.
All three have promised to roll out their own responses to Trump’s tariffs, exacerbating fears over an escalating international trade conflict.
However, Commerce Secretary Howard Lutnick has said that Trump could announce a compromise with Canada and Mexico on the tariffs soon, adding that the president could meet the traditional U.S. trading partners "in the middle."
Still, Trump’s policies -- which could include separate tariffs on materials like steel and aluminum as well as sweeping reciprocal levies on friends and foes alike -- are an indication of a move away from "the free trade orthodoxy that has dominated Washington for decades," Dennis Shea, a former Deputy U.S. Trade Representative during Trump 1.0, told the Jefferies analysts.
In a note to clients, the analysts added that Shea sees Trump’s recent tariffs as the start of a "multi-pronged" push to bolster domestic U.S. productive capacity and address perceived trade and non-trade grievances through a more "bilateral, confrontational strategy."
Shea noted that White House personnel are now "well-aligned" to Trump’s agenda and have displayed little internal dissent, in contrast to the presence of more tariff-skeptical advisors to the president during his first term, the analysts wrote.