Tariff Man.

Who could have guessed he meant what he said?

“If I could only open one thing each morning it would be John Ellis’s News Items newsletter.” — Larry Summers, President Emeritus of Harvard University and former Secretary of the Treasury of the United States.

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1. Goldman Sachs:

President Trump signed executive orders imposing a 25% tariff on imports from Mexico, a 25% tariff on imports from Canada apart from energy, which would face a 10% tariff, and a 10% tariff on imports from China. These tariffs would apply above and beyond existing tariffs. While the details of products eligible for the lower energy tariff have not been released, we expect it to cover oil, gas, and electricity. A Federal Register notice is likely to be published with implementation details, including specific product codes eligible for the lower rate.

The White House has highlighted a “retaliation clause” in the executive orders that states that should one of the countries “retaliate against the United States in response to this action through import duties on United States exports . . . or similar measures, the President may increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.” While this is a clear warning against retaliation, it has no automatic effect.

The tariffs are scheduled to take effect at the start of Feb. 4. With only two days before implementation, the tariffs look likely to take effect, though a last-minute compromise cannot be completely ruled out. The White House fact sheet on the tariffs and the executive orders highlight fentanyl and immigration as the motivation for the tariffs, but there are no explicit criteria provided for lifting them beyond cooperation on and an improvement in the immigration and fentanyl situations. In light of their potential economic effects and the fact that the White House has set general conditions for their removal, we think it is more likely that the tariffs will be temporary but the outlook is unclear.