The Morning: A looming trade war

Plus, Venezuelan immigration, government websites and the Grammy Awards.

View in browser|nytimes.com February 3, 2025 By German Lopez Good morning. We're covering the potential impacts of Trump's tariffs. We're also covering Venezuelan immigration, government websites and the Grammy Awards. In Detroit. Brittany Greeson for The New York Times Tit for tat Out of the many tariffs that President Trump promised on the campaign trail, those he announced over the weekend are the most likely to affect U.S. consumers. The three countries he targeted — Canada, China and Mexico — are America's biggest trade partners, making up about four in 10 U.S. imports. The tariffs, up to 25 percent on Canada and Mexico and 10 percent on China, have shaken markets and angered allies. They will also likely raise prices on these countries' goods, including gasoline, avocados and car parts. (See what prices could rise.) Source: Census Bureau | Countries with at least a 2 percent share in 2024, through November, are shown, accounting for about three-quarters of imports. | By The New York Times Canada, China and Mexico have promised to retaliate. Leaders said that they didn't want a trade war but that they felt forced to act. Canada announced 25 percent tariffs on U.S. products to match Trump's. They target goods like American-made honey, tomatoes and whiskey. Mexico said it would impose retaliatory tariffs, too. China said that it would file a case against the United States at the World Trade Organization and take "corresponding countermeasures." Today's newsletter will look at Trump's goals for tariffs and what could come next. Trump's goals Why has Trump imposed tariffs? He and his allies have offered three main explanations. 1. National security: Trump has argued the tariffs address national security concerns. China is a major geopolitical rival, and Trump says Canada and Mexico haven't done enough to curb illegal immigration and drug trafficking. 2. Competition: Trump has said tariffs could make American manufacturers more competitive. U.S. products are typically more expensive than those from other countries, a result of higher labor costs and stricter regulations. Tariffs could help level the playing field. 3. Revenue: The tariffs, which are effectively taxes on foreign goods, will raise government revenue. Trump has often spoken favorably of tariffs for this reason, as my colleague David Sanger explained. Trump has suggested that tariffs can help reduce or replace income taxes. The case against tariffs Economists on the left and the right are particularly skeptical of the second and third claims. While tariffs can help level the playing field, they can also lead to a trade war. Retaliatory tariffs and a stronger dollar could cause American manufacturers to lose business because their products would become more expensive, and less desirable, internationally. And the money raised by these tariffs amounts to just 2 percent of federal revenues. The prospect of higher prices has made some of Trump's Republican allies critical of his actions, although most stayed silent. "We won the last election by complaining about Democrats' policies, which gave us high prices," Senator Rand Paul of Kentucky wrote. "Tariff lovers will be forced to explain the persistence of high prices." Companies passed the cost of Trump's first-term tariffs on to American consumers, studies found. Poor and middle-class Americans stand to feel the effects more because the day-to-day stuff they buy represents a bigger share of their income. The case for tariffs Trump's defenders, including his top economist, argue that his critics overestimate the negative effects of tariffs. They say that markets will adjust and that other policies can mitigate bad outcomes. When Trump imposed tariffs during his first term, some suppliers in China cut their prices to offset part of the cost. Trump's allies also say that imports from Canada, China, and Mexico are too small, at only 5 percent of the U.S. economy, for tariffs on them to seriously hurt Americans. Meanwhile, U.S. exports to Canada and Mexico make up a larger share — around 15 to 20 percent — of those countries' economies. So they could suffer more from a trade war and capitulate to Trump's demands. Uncertain future A major question remains: Will Trump leave his tariffs in place for long? Some of Trump's allies have suggested that he will use the threat of tariffs as a negotiating tactic. If Trump just wants Canada and Mexico to do more on illegal immigration and drug trafficking, he may have imposed these tariffs only to show that he's serious about national security. Once the three countries negotiate, Trump may rescind the tariffs. Still, Canada and Mexico already cooperate with the United States on immigration and drug trafficking, and illegal immigration and overdose deaths fell in the last year. Trump has yet to explain what, specifically, he would like America's neighbors to do. Justin Trudeau, Canada's prime minister, said he had tried to reach out to Trump since Inauguration Day but had not heard back. If Trump cares more about his other goals — American manufacturing and revenue — then the tariffs need to remain in place to achieve their main objectives. The permanent outcome is the most likely to hurt American consumers. In the short term, companies might eat the cost of tariffs that they believe to be temporary to avoid disrupting consumer demand for their products. But if they believe the tariffs are permanent, companies are more likely to pass the costs on to consumers through higher prices. As a result, you could pay more at the pump, the grocery store and the car dealership. International response Asian and European stock markets fell. The tariffs threaten to upend the global economic order. While they hurt China, they also give Beijing diplomatic opportunities. More countries, including America's closest allies, are creating their own economic partnerships without the United States. The premier of British Columbia announced that the province would stop sales of alcohol produced in red states. More news Trump defended the tariffs while acknowledging that there could be negative consequences. "WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)," he wrote on social media. American home builders, retailers and alcohol producers said they worried their costs would go up — and so would prices. Trump also ordered an end to the ability of Americans to buy up to $800 of goods per day from each country without paying tariffs. That's a blow to online stores like Temu and Shein that ship directly from factories in China. American law enforcement officials have blamed duty-free shipments for allowing fentanyl into the U.S. because the shipments receive little or no inspection by customs agents. THE LATEST NEWS Politics A woman from Venezuela with her daughters in Denver. Jimena Peck for The New York Times The Trump administration revoked Temporary Protected Status for more than 300,000 Venezuelans in the U.S. The move puts them at risk of deportation in coming months. The two top security officials at the U.S. Agency for International Development were put on leave after refusing to give representatives of Elon Musk access to internal systems. More than 8,000 government web pages have been taken down since Friday afternoon, a New York Times analysis found. "We have no coherent message": Democrats are struggling to oppose Trump. International In Novi Sad, Serbia.  Nenad Mihajlovic/Agence France-Presse — Getty Images A deadly railway station collapse has prompted months of large protests in Serbia. The governing party criticized the state-controlled broadcaster for covering them. Secretary of State Marco Rubio visited Panama and escalated the confrontation over the Panama Canal. He accused the country of letting China control it. Plane Crash A makeshift memorial in Washington. Kent Nishimura for The New York Times Emergency crews have recovered most of the bodies from last week's midair crash in Washington. Officials believe it killed 67 people. They plan to lift the wreckage of the jet involved out of the Potomac River today. The jet, an American Airlines flight, turned upward shortly before the crash. Read what we know. The Army identified the co-pilot of the helicopter in the crash. The airspace around the capital is difficult to navigate. See maps. Other Big Stories OpenAI released Deep Research, an A.I. tool that can gather information from across the internet and synthesize it in concise reports. A professional rope jumper rescued a teenager who fell through thin ice in Indiana. He used his jump rope in the rescue. Opinions Trump wants to remove highly qualified service members because they are transgender. He will weaken the military as a result, Bree Fram, a colonel in the U.S. Space Force, writes. Gail Collins and Bret Stephens discuss Trump's first two weeks. Here is a column by David French on Kash Patel. The Times Sale: Our best rate for readers of The Morning. Save now with our best offer on unlimited news and analysis as part of the complete Times experience: $1/week for your first year. MORNING READS Katherine Wolkoff for The New York Times Ozempic: Weight-loss drugs can upend a marriage. Read one couple's experience. See Lucy run: Our early human ancestor was capable of running, if slowly, a new study finds. Ethicist: "I'm happily married. I just want to sleep with another man before I die." Metropolitan Diary: Exchanging smiles in the dark. It's Black History Month: Read about its origins. Most clicked yesterday: An Opinion article telling you how to give up your smartphone. Lives Lived: Millicent Dillon was a novelist and prizewinning short-story writer, best known for nonfiction that chronicled an eccentric literary couple. She died at 99. SPORTS Women's college basketball: Iowa retired Caitlin Clark's jersey just after a huge upset of No. 4 U.S.C. N.B.A.: The Kings sent their star guard De'Aaron Fox to the Spurs in a three-team trade. N.F.L.: The Raiders hired Ohio State's offensive coordinator, Chip Kelly, in the same role. ARTS AND IDEAS Beyoncé Kevin Winter/Getty Images for The Recording Academy At the Grammy Awards, Beyoncé won album of the year for "Cowboy Carter," and she became the first Black artist to win best country album. Kendrick Lamar won five Grammys, including song and record of the year for "Not Like Us," and Chappell Roan was named best new artist. Doechii and Sabrina Carpenter also won awards. See the winners. President Jimmy Carter won a posthumous Grammy for a spoken-word album, "Last Sundays in Plains." Most Grammy parties were canceled because of the fires. Some went ahead as fund-raisers. Taylor Swift, despite numerous Grammy victories, has yet to win record or song of the year. More on culture From Gaurav Gupta's collection. Simbarashe Cha/The New York Times See the best outfits from couture week in Paris. People are using cannabis paraphernalia as home décor. The word to describe this year's Sundance Film Festival is "weird," a Times critic writes. Read about the festival. THE MORNING RECOMMENDS … Ryan Liebe for The New York Times Add kimchi to your breakfast sandwich for a jolt of heat and brightness. Consider a shampoo bar. Find a great pair of leggings. Declutter your fridge. Take our news quiz. GAMES Here is today's Spelling Bee. Yesterday's pangrams were guardian and guarding. And here are today's Mini Crossword, Wordle, Sudoku, Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. — German Sign up here to get this newsletter in your inbox. Reach our team at themorning@nytimes.com. Editor: David Leonhardt Deputy Editor: Adam B. Kushner News Editor: Tom Wright-Piersanti Associate Editor: Lauren Jackson News Staff: Desiree Ibekwe, Brent Lewis, German Lopez, Ashley Wu News Assistant: Lyna Bentahar Saturday Writer: Melissa Kirsch Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account. To stop receiving The Morning, unsubscribe. To opt out of other promotional emails from The Times, including those regarding The Athletic, manage your email settings. To opt out of updates and offers sent from The Athletic, submit a request. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018