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Experts: Trump tariff threat did damage even though it was called off

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Donna Burton
/
U.S. Government Works

President Donald Trump has backed down, for now, from his threat to impose tariffs on goods from Mexico. But experts say the threat itself was damaging to the corporate world.

Kristin Dziczek is with the Center for Automotive Research. She says tariff threats mean automakers and others that depend on Mexico for trade have trouble planning ahead. They lose time and money focusing on the threat instead of their core business.

And she says other countries were watching.

"When we're negotiating with Japan, with the EU, with the UK potentially, and this move to put tariffs on top of a free trade partner, I think makes our trading partners less willing to compromise when they're negotiating with us," says Dziczek.

Michigan State University economist Charles Ballard agrees that the tariff threat created sudden uncertainty for businesses that depend on trade with Mexico.

"The announcement that there might be tariffs on Mexico came as a bolt out of the blue," says Ballard. "It caught everybody in the American business community by surprise."

And the timing was bad in other ways, Ballard says. It added to the uncertainty that comes with a slowing economy in China, tepid U.S. retail sales, and a lackluster U.S. jobs report on Friday.

The uncertainty has not been completely lifted. President Trump on Sunday said if the deal with Mexico over immigration falls short of expectations, he could still impose "very profitable" tariffs on goods coming out of that country.

It's unclear what the President means by profitable tariffs. 

Any tariffs on goods from Mexico would be paid by American companies which import the goods, and the additional costs would almost certainly be passed on to American consumers in the form of higher prices for food and other products.