Economists say Trump tariff threats, DOGE job cuts are ‘chilling’ the economy
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(WASHINGTON) — Economists say the uncertainty from President Donald Trump’s tariff threats and mass layoffs of government workers are starting to have a “chilling” effect on the U.S. economy.
“It’s a very difficult business environment, because they can’t plan for what their cost structure is going to be,” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security. “It’s adding to investment uncertainty, and some people are holding back on investments.”
Trump has so far imposed 10% tariffs on Chinese imports and says he’ll impose additional 10%, plus 25% tariffs on Canada and Mexico on March 4. Trump also says he will impose “reciprocal tariffs” that match the duties other countries levy on the U.S. That comes on top of tariff plans on cars, semiconductors, steel and aluminum. Even if Trump doesn’t ultimately move forward with all his tariff threats, the mere uncertainty has a chilling effect.
“If one of the inputs of your factory goes up by 25%, you might cut your production and say maybe we’ll have to fire some people,” Ziemba added.
Meanwhile, the Department of Government Efficiency’s slashing of the federal workforce across the country “also impacts consumption, because people are losing their jobs or are afraid of losing their jobs, so that might cause them to save more money,“ Ziemba said.
This week, The Conference Board’s consumer sentiment survey found that it registered the largest monthly decline since August 2021.
“Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a 10-month high,” said Stephanie Guichard, senior economist for global indicators at The Conference Board.
“Average 12-month inflation expectations surged from 5.2% to 6% in February. This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs,” Guichard said.
The Canada and Mexico tariffs would have a sweeping effect, since those are America’s two biggest trading partners. It could raise prices at the grocery store and the gas pump. Ziemba also noted that the cost of cars could increase by several thousand dollars.
“Every time a car part crosses the border, 25% tariffs could be very onerous,” Ziemba said. “We could see the cost of building a house go up quite substantially.”
(WASHINGTON) — Elon Musk took another shot at Peter Navarro on Tuesday over tariffs, calling President Donald Trump’s top adviser on trade and manufacturing a “moron” and “dumber than a sack of bricks.”
Musk, a senior Trump adviser who had promoted Trump’s agenda, has been critical of Navarro, one of the architects of Trump’s tariff policy who has made the rounds in media defending the sweeping tariffs the president imposed last week that sent world markets plunging.
Musk’s insults Tuesday came after Navarro called the Tesla CEO a “car assembler” rather than a “manufacturer,” claiming that key components of his Teslas come from overseas.
That prompted Musk to respond.
“Navarro is truly a moron. What he says here is demonstrably false,” he posted on X.
He claimed in a second post, “Tesla has the most American-made cars. Navarro is dumber than a sack of bricks,” and tagged Navarro’s handle in the post.
Asked about the feud at Tuesday’s White House press briefing, press secretary Karoline Leavitt dismissed it as “boys will be boys.”
“No, look, these are obviously two individuals who have very different views on trade and on tariffs. Boys will be boys, and we will let their public sparring continue,” Leavitt said. “And you guys should all be very grateful that we have the most transparent administration in history.”
Musk threw shade at Navarro early Saturday morning over his Harvard education.
After a social media user posted a clip defending Navarro’s explanation of the White House’s tariffs, pointing out his PhD in economics from Harvard, Musk responded, “A PhD in Econ from Harvard is a bad thing, not a good thing. Results in the ego/brains>>1 problem.”
In an interview on Fox News Channel’s “Sunday Morning Futures,” Navarro responded to Musk’s posts, saying, “Elon, when he’s in his DOGE lane, is great, but we understand what’s going on here. Elon sells cars. He’s simply protecting his own interests.”
“There’s no rift here,” he added. “Look, Elon, he’s got X, he’s got a big microphone. We don’t mind him saying whatever he wants. But, just, the American people need to understand that we understand what that’s all about, and it’s fine.”
Musk said he offered Trump advice on tariffs when he spoke via live stream in Washington to the Italy’s League Congress Conference in Florence on Saturday.
Musk expressed his hope for the U.S. and Europe to create “a very close, stronger partnership” and reach a “zero-tariff” policy soon.
“I hope it is agreed that both Europe and the United States should move, ideally, in my view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America,” Musk said.
“And also more freedom of people to move between Europe and North America if they wish, if they wish to work in Europe or wish to work in America, they should be allowed to do so, in my view. So that has certainly been my advice to the president,” he continued.
(WASHINGTON) — Senate Republicans are plowing ahead with their efforts to advance the first stage of its two-part budget package to pay for President Donald Trump’s agenda despite Trump throwing his weight behind the House’s more comprehensive one-bill plan.
In a post on Truth Social on Wednesday, Trump endorsed the House’s budget bill, which bolsters funding for the border and national security while simultaneously extending the tax cuts implemented during Trump’s first term and slashing trillions in funding for a variety of programs.
“The House Resolution implements my FULL America First Agenda, EVERYTHING, not just parts of it!” Trump posted.
He reiterated his belief that there ought to be “ONE BIG BEAUTIFUL BILL” that comprehensively handles many of his campaign promises in one fell swoop.
House Speaker Mike Johnson has backed this strategy from the start. He believes the House bill, which also includes a hike to the federal debt limit that many of his members typically oppose, is robust enough to cull support from the members of his widely divided conference. This is essential because Johnson’s razor-thin majority allows for almost no GOP defections.
Senate Republicans say they favor that plan, but they’re skeptical that it can get done in the timely fashion necessary to deliver Trump early-term wins on border security.
“I prefer what you’re doing to what we are doing, but we’ve got to get it done soon,” said Sen. Lindsey Graham, the Budget Committee chairman. “Nothing would please me more than Speaker Johnson being able to put together the bill that President Trump wants. I want that to happen. But I cannot sit on the sidelines and not have a Plan B.”
Graham’s move to advance the Senate bill escalates an ongoing battle between Republicans in the two chambers of Congress who are vying for Trump’s approval in the early stages of his administration. Johnson has already called the Senate package a “non-starter” and has signaled that even if the Senate passes its budget plan, the House will hold off on bringing it up in favor of its own bill.
The Senate plan aims to deliver Trump wins on the border by allocating more funds for his immigration policy. It also beefs up defense spending and makes modifications to energy policy. But unlike the House bill, the Senate plan would take up the debate about extending the Trump tax cuts later and hiking the debt limit to a separate bill to be taken up later this year.
Senators believe this strategy allows them to strike quickly to address “immediate needs” while buying time for a more complex debate about tax policy.
Majority Leader John Thune, in remarks on the Senate floor Thursday morning, said Senate Republicans are committed to making Trump’s 2017 tax cuts permanent, but said there is still “substantial work left to do to arrive at a bicameral agreement” on the issue.
“When the President’s ‘Border Czar’ was here last week, he emphasized that the administration cannot sustain its effort to deport criminals here illegally without additional funding and the last thing we want is to delay other parts of the president’s agenda like border security as we do the work needed to arrive at a tax agreement that can pass both houses of Congress,” Thune said. “That’s what the Senate is moving forward on a two-part legislative plan to accomplish our and the president’s top priorities.”
The need to deliver border funding urgently requires swifter action than debate on a tax bill will allow, Republican Whip John Barrasso said.
“President Trump’s actions are working. They are working so well that the Trump administration says it is running out of money for deportations. ‘Border Czar’ Tom Homan told us that. [Homeland Security] Secretary [Kristi] Noem told us that. Secretary of Defense Pete Hegseth told us that. Attorney General Pam Bondi told us that. Senate Republicans will act quickly to get the administration the resources they requested and need,” Barrasso said.
Despite Trump’s endorsement of the House plan on Wednesday, senators left a closed-door lunch with Vice President JD Vance on Wednesday committed to advancing their proposal.
So Thursday evening, senators will participate in a blitz of 10-minute amendment votes called a “Vote-a-rama.” This process, which is expected to last through the night, is just the first step in unlocking a fast track budget tool called reconciliation, which allows the Senate to bypass the normal 60-vote threshold to advance tax and budget related provisions.
Senate Democrats are committed to opposing the reconciliation bill.
“I think most of us here get that no matter who the president is, our constituents expect us to work for them,” said Sen. Patty Murray, D-Wash., during a floor speech. “They expect us to fight for them, and they expect us to do the hard work of passing laws to make their lives better. People don’t send us here to make their lives worse, but that’s exactly what Trump and [Elon] Musk are doing — They are looking at our most pressing problems and making them worse, and this budget proposal will only add fuel to that fire right now.”
But Democrats can only stall the bill. If all Republicans hang together, there’s nothing Democrats can do to block it.
But until House and Senate Republicans get on the same page, tonight’s vote-a-rama could prove largely fruitless.
(WASHINGTON) — President Donald Trump on Wednesday said he spoke with Russian President Vladimir Putin about ending the war in Ukraine, which started three years ago when Putin’s forces launched a full-scale invasion.
“I just had a lengthy and highly productive phone call with President Vladimir Putin of Russia,” Trump wrote in a lengthy post on his conservative social media platform. “We discussed Ukraine, the Middle East, Energy, Artificial Intelligence, the power of the Dollar, and various other subjects.”
On Ukraine, Trump said he and Putin “agreed to work together, very closely, including visiting each other’s Nations.”
“We have also agreed to have our respective teams start negotiations immediately, and we will begin by calling President Zelenskyy, of Ukraine, to inform him of the conversation, something which I will be doing right now,” Trump said. A source confirmed to ABC News that Trump and Zelenskyy were speaking by phone.
Trump added, “President Putin even used my very strong Campaign motto of, “COMMON SENSE.” We both believe very strongly in it.”
The discussion between Trump and Putin lasted an hour and a half, according to Kremlin spokesman Dmitry Peskov.
“President Trump spoke in favor of an early end to hostilities and a peaceful solution to the problem. President Putin, for his part, mentioned the need to eliminate the root causes of the conflict and agreed with Trump that a long-term settlement can be achieved through peaceful negotiations,” Peskov told reporters.
Ukraine’s Zelenskyy has demanded full territorial liberation, and earlier this week signaled a willingness to swap territory with Russia.
U.S. Defense Secretary Pete Hegseth said earlier Wednesday that a return to Ukraine’s pre-war borders is an “unrealistic objective” in peace talks, as was NATO membership for Ukraine.
The comments were made at his first meeting of the Ukraine Defense Contact Group, a coalition of countries working to support Kyiv, in Brussels.
“President Trump has been clear with the American people — and with many of your leaders — that stopping the fighting and reaching an enduring peace is a top priority,” Hegseth told leaders.
Trump has long maintained, and repeated in his post Wednesday, that the war in Ukraine would never have happened had he been president.
He also thanked Putin for the release of Marc Fogel, an American teacher who had been serving a 14-year prison sentence in Russia after being arrested on drug charges in 2021. Fogel arrived at the White House late Tuesday night.
ABC News’ Ellie Kaufman contributed to this report.
