As alarmed investors continue to respond to potential ramifications of President Donald Trump‘s steep tariff action, CNBC’s Jim Cramer laid out some of Wall Street’s major concerns and offered some foresight and his take on how the White House might view the issue.
“I make no judgments about whether the Trump administration’s worldview is good or bad; or even right or wrong,” he said. “I just want to put it out there, so you know what you’re getting into if you decide to stay in stocks during what’s becoming a tumultuous phase in our country’s history.”
The indexes tumbled during Tuesday’s session, with the Dow Jones Industrial Average dipping for the second day in a row, down 1.55% by close. The S&P 500 declined 1.22% and the Nasdaq Composite shed 0.35%. After delaying the increases for a month, Trump slapped 25% tariffs on goods from Canada and Mexico. He also issued an additional 10% tax hike on imports from China after previously implementing a 10% increase last month. Retaliation from all three countries is underway: China added a 15% tariff on some U.S. goods, Canada announced a 25% levy on U.S. products, and Mexico indicated it would respond with its own tariffs this weekend.
Cramer listed several uncertainties created by Trump’s tariff hikes, including how the new levies out of Mexico will be paid. Technically, tariffs should be enforced by Customs and Border Protection, he pointed out, but noted that the agency might be kept too busy by Trump’s deportation plans. Another unknown is whether companies that commit to boosting domestic manufacturing will be eligible for some sort of rebate, Cramer continued.
He also honed in on the White House’s general attitude towards other countries, saying it doesn’t seem to matter whether a country is an ally, but whether it “pays its freight.” It seems irrelevant to the Trump administration whether its trade policies are consistent, Cramer said, adding that it also doesn’t matter that tariffs have historically been considered bad for business. He also highlighted uncertainty around whether other U.S. trading partners will be hit with tariffs next.
“There’s no sign that they will, no sign that they won’t, so you have to stay on your toes,” he said.
The White House did not immediately respond to request for comment.
