WASHINGTON — Donald Trump held off on imposing new import tariffs during his first day and placed a big bet that his executive actions can lower energy prices and tame inflation.
“The inflation crisis was caused by massive overspending,” Trump said in his inaugural address as he suggested that increased oil production will lower prices.
Orders on Monday, including one tied to Alaska, were meant to ease the regulatory burdens on oil and natural gas production, according to an incoming White House official who insisted on anonymity while outlining Trump’s plans during a call with reporters.
Trump also planned to declare a national energy emergency in hopes of jump-starting more electricity production in the competition with China to build out technologies such as artificial intelligence that rely on data centers using tremendous amounts of energy.
The official said the new administration, on his first day in office, will end what Trump calls an electric car “mandate.” While there is no mandate from outgoing Democratic President Joe Biden to force the purchase of electric vehicles, his policies have sought to encourage Americans to buy EVs and auto companies to shift from gas-powered vehicles to electric cars.
Trump, during his campaign and after he won the November election, threatened tariffs on China, Mexico, Canada and other countries. But he appears to be holding off so far on higher taxes on imports. A Wall Street Journal story Monday said Trump would only sign a memorandum telling federal agencies to study trade issues.
Still, Trump pledged in his inaugural address that tariffs would be coming and said foreign countries would be paying the trade penalties, even though those taxes are currently paid by domestic importers and often passed along to consumers.
“I think nearly all economists, at least those who aren’t joining this administration, would say … that tariffs, particularly ones as steep as 25% on our biggest trading partners, are very damaging to our own economy,” Associated General Contractors of America Chief Economist Ken Simonson said in a recent media briefing. “They’re going to drive up prices, not just on the imported items themselves, but I think contractors here would confirm that they saw prices rise from domestic suppliers also.”
The U.S. is the largest importer of goods in the world, and such tariffs, if implemented, would likely raise prices on things like automobiles and food produced in Mexico and Canada; clothes, toys and electronics made in China; and other goods.
The decision to pause and study tariffs was a sign to the Canadian government that it should be prepared for almost all possibilities on the direction of trade with the United States.
“Perhaps he’s made decisions to sort of suspend the threat of tariffs over a whole slate of countries. We will wait and see,” Canadian Finance Minister Dominic LeBlanc said.
Trump’s tariff threats stand to hurt American economic interests because they would disturb automotive supply chains where the U.S. is strong and drive up consumer prices, said the head of General Motors Co.’s Canadian unit.
“It is a disruption that is in no one’s interest, especially in the U.S.,” GM Canada President Kristian Aquilina said in an interview.
Overall, Trump faces an array of challenges with fulfilling his ambitions to lower prices. Biden managed to see the inflation rate drop over two years, yet he was leaving office with price growth still outpacing wages over the past four years.
A big driver of inflation is a persistent housing shortage, and U.S. oil production is already at record levels, with producers facing uncertainty about global demand this year.
Trump has said natural resource production is key to lowering costs for American consumers, both at the pump and in their utility bills.
Trump, who has pledged to restore U.S. “energy dominance,” has complained that the Biden administration limited Alaska’s oil and gas production.
Trump showed his relative indifference to fossil fuels accelerating climate change, even as he lamented natural disasters such as the Los Angeles wildfires. He said he would again withdraw the United States from the landmark Paris climate agreement, dealing a blow to efforts to combat global warming and once again distancing the U.S. from its closest allies.
Energy can affect prices, but it’s not the largest chunk of families’ spending. According to the weightings for the consumer price index, energy spending represents on average just 6% of expenditures, much less than food (13%) or shelter (37%).
Voters were unimpressed with the progress against inflation, frustrated that prices remained more than 20% higher than they were four years ago while average weekly earnings had not kept up. Higher grocery prices — up 27% from February 2021 — were especially painful.
After the inaugural address, Trump played down the importance of inflation in the 2024 election, suggesting that his voters cared more about immigration because there were only so many ways to talk about prices.
“How many times can you say that an apple has doubled in cost?” Trump said.
MEMECOIN CRITICS
Trump unveiled a “Trump” memecoin token on Friday and his wife, Melania, introduced her “Melania” effort on Sunday. The Trump memecoin’s market value hit $15 billion at one point but then briefly slid below $8 billion as Melania’s token took some of the spotlight, figures from aggregator CoinMarketCap show.
The new memecoins ignited criticism from crypto executives who were expecting the digital-asset sector to be treated seriously by the new administration.
The memecoin sector, stuffed with joke tokens like dogecoin offering little intrinsic value and lots of volatility, is divisive as it feeds criticism of the nascent industry as too frivolous and risky for mainstream investors. Memecoins rely on social media tailwinds that can disappear as quickly as they arise.
Some executives said Trump’s latest crypto foray will do more harm than good to an industry trying to rebuild its reputation. It quickly added a windfall of billions of dollars, at least on paper, for Trump-linked entities just as the incoming president is said to weigh an executive order designating the asset class a “national priority.”
BITCOIN SOARS, SWOONS
The price of bitcoin surged to over $109,000 Monday as a pumped-up cryptocurrency industry bets Trump will take action soon after returning to the White House. By midafternoon, bitcoin was down 2% from its opening price of $101,165.73.
Once a skeptic who said a few years ago that bitcoin “seems like a scam,” Trump has embraced digital currencies with a convert’s zeal. He’s vowed on the campaign trail to take steps early in his presidency to make the U.S. into the “crypto capital” of the world.
His promises including creating a U.S. crypto stockpile, enacting industry-friendly regulation and event appointing a crypto “czar” for his administration.
Bitcoin is the world’s most popular cryptocurrency and was created in 2009 as a kind of electronic cash uncontrolled by banks or governments. It and newer forms of cryptocurrencies have moved from the financial fringes to the mainstream in wild fits and starts.
The volatile nature of cryptocurrencies as well as their use by criminals, scammers and rogue nations, has attracted plenty of critics, who say the digital currencies have limited utility and often are just Ponzi schemes.
Information for this article was contributed by Josh Boak, Matthew Daly, Rob Gillies and Paul Wiseman of The Associated Press; J. Scott Trubey, Kelly Yamanouchi and Drew Kann of The Atlanta Journal-Constitution (TNS); and Ryan Weeks and Mathieu Dion of Bloomberg News (WPNS).
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