WASHINGTON — Douglas Irwin is a New Hampshire college professor who has spent decades studying tariffs. On Feb. 2, he got a painful lesson in how they work in the real world.
His utility company sent him a letter alerting him that with President Donald Trump planning to slap tariffs on Canada, his heating bill would rise. Trump later postponed the tariffs for a month, but the point had been made: New tariffs meant Irwin and other customers would be paying more to heat their homes in frigid New England winters with propane coming down from Canada.
“It’s been a very cold winter up here, and [the tariffs] would have an immediate impact on a big-ticket item for consumers,” Irwin said in an interview.
As a candidate, Trump promised to impose tariffs on nations he says have shortchanged the United States. He also promised that people would pay lower prices. Either may be possible, but together the goals are incompatible, economists say.
On another front, Trump wants to extend his multitrillion-dollar tax cut from the first term and simultaneously curb “the unsustainable path of federal debt.” A president can do one or the other but not both, according to budget analysts.
Whatever savings Elon Musk’s effort to shrink the government workforce achieve won’t be nearly enough to offset the cost of the tax cuts, said Erica York, vice president of federal tax policy at the nonpartisan Tax Foundation.
“What they [Musk and his aides] are doing is a drop in the bucket and potentially creating more chaos and uncertainty for the economy, which doesn’t help with boosting incentives to grow and invest,” she said.
The start of Trump’s second term has been a blur of activity. Each week brings fresh White House directives, orders and statements. Americans say they like the energy so far, according to a CBS News poll.
Yet a peril of Trump’s perpetual motion machine is that policies and pronouncements may collide head-on. Fulfilling one could snuff out another.
Trump makes no apologies. Speaking to reporters over the weekend, he said, “I’ll tell you what, this country has made more progress in the last three weeks than it’s made in the last four years, and we’re respected again as a country.”
A White House official said in an interview Wednesday that policies should be looked at not in isolation but in the aggregate.
“When you take a step back and look at the full picture of what this administration is doing, it’s all complementary,” the official said, speaking on condition of anonymity. “When you look at the holistic set of policies here, our agenda very much makes sense.”
Getting in his own way
The economy is but one arena in which Trump may be getting in his own way.
An executive order Trump released on his first day in office called for ending the “weaponization” of government for political purposes. Yet in dropping a criminal case against New York Mayor Eric Adams, the Trump administration signaled that Trump may use law enforcement for leverage in enacting his agenda.
Separately, Trump has called for stanching the flow of illegal drugs into the country, but his administration has temporarily redeployed more than 300 government agents whose jobs included stopping the flow of fentanyl into the United States.
Instead, the agents have been told to help meet a different Trump objective: deporting undocumented immigrants, four people familiar with the decision told NBC News.
The agents are part of a Homeland Security Department law enforcement unit whose mission also includes combating child exploitation, money laundering and human trafficking. That work may suffer as a result of the reassignments, the sources said.
In reply, the White House official countered that deporting criminals living in the United States illegally and keeping drugs out of the country are interconnected goals. The two go “hand in hand,” the person said.
Arresting criminal migrants living in the United States “kills the business model of the cartels that are trafficking in both people and drugs,” the official added.
Another of Trump’s stated goals is safeguarding free speech. He issued an executive order last month holding that “the First Amendment to the United States Constitution, an amendment essential to the success of our Republic, enshrines the right of the American people to speak freely in the public square without government interference.”
Associated Press reporters, though, are facing staunch interference from the same president who put his name to that high-minded position.
Upon taking office, Trump renamed the Gulf of Mexico the “Gulf of America,” discarding a term that has been in use for centuries.
The wire service, whose stylebook is the guidepost for many news outlets, said it would stick with the old name while noting Trump’s change.
That didn’t sit well with Trump, and AP reporters have lost their seat on Air Force One and been barred from pools in which a small group of journalists are admitted into certain White House events where they’re able to pose questions to the president.
“We’re going to keep them out until such time as they agree that it’s the Gulf of America,” Trump told reporters this week.
Punishing an influential news service that exercises free speech would seem to be in conflict with Trump’s own policy.
“Punitive measures against the AP are very bad and very strange,” said Margaret Sullivan, executive director of Columbia University’s Center for Journalism Ethics and Security. “The White House and the president don’t get to write the stylebook for The Associated Press.
“There’s an important First Amendment issue here: In the United States, the government is not supposed to control or restrain the free press, and that’s exactly what’s happening here,” she added.
Asked about the treatment of the AP, the White House official said: “The fact is that the chief executive of the United States government issued an executive order renaming the Gulf of Mexico. If you won’t report that accurately, we don’t have confidence you’ll cover other things correctly. So why would we give you access here?
“It’s not like we have armed guards on the White House campus telling the AP to get lost,” the official added. “We’re just saying if one party in a relationship is not acting in good faith, the other party is not going to unilaterally show good faith.”
Moreover, since it took office the Trump White House has restored 400 press passes the Biden administration had “revoked,” the official added, while Trump has proven far more accessible to the news media than Biden.
Tariff troubles
There may no economic instrument that Trump likes more than tariffs. He savors the word itself, calling it the “most beautiful” in the language.
In a speech Wednesday in Miami Beach, Florida, Trump previewed a new set of tariffs that are in the works.
“I’m going to be announcing tariffs on cars and semiconductors and chips and pharmaceuticals, drugs and pharmaceuticals and lumber, probably, and some other things over the next month or sooner,” he said.
But following through and imposing all the tariffs he’s considering risks neglecting a separate promise that may be more important to voters.
Trump was elected in part to bring down the cost of groceries, gas and other staples of everyday life. If tariffs undercut his pledge to do just that, he risks blowback from some of the same voters who ousted Joe Biden.
The CBS News survey found that nearly two-thirds of adults thought Trump’s focus on lowering prices was “not enough.”
Tariffs raised the prices of washing machines and dryers during Trump’s first term by 12%, a University of Chicago study found.
But the White House official noted that Trump’s tariffs in the first term didn’t drive up inflation. And in the new term, the administration is addressing the “root cause” of inflation, “which is not tariffs but runaway government spending that drives up demand and causes prices to rise.”
“This administration has been ambitious with spending cuts, and that enables us to do tax cuts without driving up the deficit. They’re not mutually exclusive.”
Still, there are early signs that Trump’s tariffs may push up prices.
A roofing materials company called GAF sent a letter to North American customers on Feb. 10 citing the 10% tariff Trump imposed on Chinese imports and mentioning potential “price inflation” that may follow.
In a statement to NBC News, a company spokesman said, “We expect that tariffs could be an inflationary driver, but it’s too soon to speculate on the specific impact until we have a better understanding of their exact scope and timing of implementation.”
If Trump wants his tariffs, he may have to accept higher prices. If he wants lower prices, he may have to forgo tariffs.
Trump may want both, he may have called for both, but “you can’t have it both ways,” said Mary Lovely, a senior fellow at the nonpartisan Peterson Institute for International Economics.
“You can’t repeal the laws of economics. And that’s what he is running into.”
