It’s a big day in markets and I would encourage you to read my primer on what is really expected by the market today around tariff numbers.
At the same time, I see some clues out there. Let’s dig in.
Yesterday, a CNBC report highlighted some strategies:
- Blanket 20% tariffs
- Tiered system of three different rates
- Country-by-country rates
The blanket rate was said to be less likely but there are some good reasons that it’s coming.
One reason is that White House Press Secretary Karoline Leavitt yesterday said that tariffs would be imposed immediately, at midnight. A report today from CNBC confirms that and also talked about a lower blanket rate on most tariffs.
If the implementation is immediate as reported, then I think it points to a blanket number. The bureaucracy around tariffs is formidable and doing country tariffs or even tiers is problematic at an agency like the USTR, which is understaffed. For example, the White House revoked ‘de minimis’ exemptions for China imports but almost-immediately reversed course because it was impossible to implement quickly.
It’s a fair guess that Trump was told that implementing country-by-country rates would take some time, perhaps a long time.
Trump himself has also talked about a rate that’s ‘better than expected’. I take the Washington Post report about 20% tariffs to be a tactical leak in order to soften the actual number, which will be lower.
Secondly, a report today said that Treasury Secretary Scott Bessent told lawmakers yesterday that tariff rates are a “cap” – that the amounts announced today are the highest the tariffs will go and counties could then take steps to bring the tariffs down.
Scott Bessent
With all that, here is what I suspect we will get:
A 10-15% universal tariff but with a further message that negotiations are possible (though this might be leaked out after Trump’s announcement). I would lean towards the lower end of that, and could even envision it below 10%.
I think the market will take that as a relief.
Finally, a critical piece of information today will be around which set of laws that Trump is aiming to use for these tariffs. The President has a weak hand here and Senators are already angling to take away some of his emergency powers on tariffs. Other methods require country-by-country investigations or have a temporary shelf life.
After the announcement, we will be watching for announcements about retaliation, which we expect from Canada, Mexico, Europe and the Asian block relatively quickly.
