{"id":111667,"date":"2025-03-24T14:59:40","date_gmt":"2025-03-24T22:59:40","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/03\/24\/trump-tariffs-and-the-boy-who-cried-wolf\/"},"modified":"2025-03-24T14:59:40","modified_gmt":"2025-03-24T22:59:40","slug":"trump-tariffs-and-the-boy-who-cried-wolf","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/03\/24\/trump-tariffs-and-the-boy-who-cried-wolf\/","title":{"rendered":"Trump, Tariffs, And \u2018The Boy Who Cried Wolf\u2019"},"content":{"rendered":"
\"\"
(Photo by Win McNamee\/Getty Images)<\/figcaption><\/figure>\n

Suppose you\u2019re the chief executive officer of an automobile company.<\/p>\n

You\u2019ve done precisely what NAFTA (and the slightly revised version of NAFTA, the United States-Mexico-Canada Agreement) suggested you should do. To minimize the costs in your supply chain, you have a factory in Canada that manufactures tires.\u00a0You have a factory in Mexico that manufactures engines.\u00a0And you do the final assembly of your vehicles in the United States.<\/p>\n

Many of the components of your automobiles cross national lines \u2014 between the U.S., Mexico, and China \u2014 many times.<\/p>\n

The Trump administration says that it wants you to manufacture vehicles entirely in the United States.\u00a0This might make sense; it might not.\u00a0The decision depends in part on the tariffs that are in effect.<\/p>\n

Donald Trump announces on January 20 that the United States will impose 25% tariffs on Canada and Mexico starting February 1.<\/p>\n

If that\u2019s true, then it might make sense to build tire and engine factories in the United States.\u00a0But those factories will cost a ton of money to build, and they won\u2019t get built overnight.\u00a0You start thinking about how best to structure your business.<\/p>\n

On February 1, Trump signs an executive order imposing 25% tariffs on Canada and Mexico set to begin on February 4.<\/p>\n

Okay.\u00a0You can start thinking about how to structure your business.<\/p>\n

On February 3, Trump agrees to a 30-day pause on the Canadian and Mexican tariffs.<\/p>\n

On February 27, Trump announces that the tariffs will be enforced starting March 4.<\/p>\n

On March 4, the tariffs take effect (with an exception for certain Canadian energy imports).<\/p>\n

On March 5, Trump announces a one-month exemption on the tariffs for U.S. automakers.\u00a0<\/p>\n

On March 6, Trump extends the delay on the 25% tariffs for many other goods until April 2.<\/p>\n

On March 10, Ontario imposes a surcharge on some electricity entering the United States; on the morning of March 11, Trump says he\u2019ll retaliate by adding another 25% to the steel and aluminum tariffs; on the afternoon of March 11, Ontario suspends its surcharge; Trump in turn undoes his proposed retaliation.\u00a0We\u2019ve made it all the way to the night of March 11.<\/p>\n

How does someone invest in an environment like this?<\/p>\n

As a CEO, what do you tell your board of directors about investing hundreds of millions of dollars in new plants in the United States that will not be completed for several years?<\/p>\n

Commit money to building the plants, and look like a jerk when Trump changes the tariff situation?<\/p>\n

Commit money to building the plants, and realize several years from now that the combination of low unemployment and mass deportation makes it impossible to hire the necessary employees?<\/p>\n

Choose not to commit the money, and look like a jerk when Trump changes the tariff situation in some other way?<\/p>\n

Or just sit on your thumbs, because the president is entirely unpredictable, and your board surely won\u2019t fire you for avoiding risk and standing pat?<\/p>\n

The same thinking holds true for every other business in America.\u00a0If Trump\u2019s idea is to rebuild American manufacturing \u2014 to onshore jobs from Canada or Mexico or China or anywhere else in the world \u2014 then tariffs must be imposed for years to give businesses economic space to build new plants.\u00a0A mere four years \u2014 a presidential term \u2014 is short for those purposes, but four weeks, or four days, or four minutes, before Trump changes his mind about tariffs is plainly not enough.<\/p>\n

If Trump wants to use tariffs for short-term deal making \u2014 coerce Colombia into accepting folks deported from the United States, and then remove the tariff \u2014 that\u2019s fine, but that use of tariffs will never result in jobs being onshored.\u00a0An administration must decide on its goals and then pursue those goals as though they matter.<\/p>\n

Trump has a short time to establish his credibility with businesses, but he\u2019ll quickly become the boy who cries wolf. If he keeps imposing \u2014 and then removing \u2014 tariffs, businesses will soon decide simply to wait for a new administration, when the president is rational and the business environment more certain.<\/p>\n

There\u2019s a price to be paid for being erratic, and the price is precisely the thing that Trump should most desire \u2014 more business investment in the United States.<\/p>\n

\n

Mark\u00a0Herrmann\u00a0spent 17 years as a partner at a leading international law firm and later oversaw litigation, compliance and employment matters at a large international company. He is the author of\u00a0<\/em><\/strong>The Curmudgeon\u2019s Guide to Practicing Law<\/em><\/strong><\/a>\u00a0and\u00a0<\/em><\/strong>Drug and Device Product Liability Litigation Strategy<\/em><\/strong><\/a>\u00a0(affiliate links). You can reach him by email at\u00a0<\/em><\/strong>inhouse@abovethelaw.com<\/em><\/strong><\/a>.<\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/strong><\/em><\/p>\n<\/p>\n

The post Trump, Tariffs, And \u2018The Boy Who Cried Wolf\u2019<\/a> appeared first on Above the Law<\/a>.<\/p>\n

\"\"
(Photo by Win McNamee\/Getty Images)<\/figcaption><\/figure>\n

Suppose you\u2019re the chief executive officer of an automobile company.<\/p>\n

You\u2019ve done precisely what NAFTA (and the slightly revised version of NAFTA, the United States-Mexico-Canada Agreement) suggested you should do. To minimize the costs in your supply chain, you have a factory in Canada that manufactures tires.\u00a0You have a factory in Mexico that manufactures engines.\u00a0And you do the final assembly of your vehicles in the United States.<\/p>\n

Many of the components of your automobiles cross national lines \u2014 between the U.S., Mexico, and China \u2014 many times.<\/p>\n

The Trump administration says that it wants you to manufacture vehicles entirely in the United States.\u00a0This might make sense; it might not.\u00a0The decision depends in part on the tariffs that are in effect.<\/p>\n

Donald Trump announces on January 20 that the United States will impose 25% tariffs on Canada and Mexico starting February 1.<\/p>\n

If that\u2019s true, then it might make sense to build tire and engine factories in the United States.\u00a0But those factories will cost a ton of money to build, and they won\u2019t get built overnight.\u00a0You start thinking about how best to structure your business.<\/p>\n

On February 1, Trump signs an executive order imposing 25% tariffs on Canada and Mexico set to begin on February 4.<\/p>\n

Okay.\u00a0You can start thinking about how to structure your business.<\/p>\n

On February 3, Trump agrees to a 30-day pause on the Canadian and Mexican tariffs.<\/p>\n

On February 27, Trump announces that the tariffs will be enforced starting March 4.<\/p>\n

On March 4, the tariffs take effect (with an exception for certain Canadian energy imports).<\/p>\n

On March 5, Trump announces a one-month exemption on the tariffs for U.S. automakers.\u00a0<\/p>\n

On March 6, Trump extends the delay on the 25% tariffs for many other goods until April 2.<\/p>\n

On March 10, Ontario imposes a surcharge on some electricity entering the United States; on the morning of March 11, Trump says he\u2019ll retaliate by adding another 25% to the steel and aluminum tariffs; on the afternoon of March 11, Ontario suspends its surcharge; Trump in turn undoes his proposed retaliation.\u00a0We\u2019ve made it all the way to the night of March 11.<\/p>\n

How does someone invest in an environment like this?<\/p>\n

As a CEO, what do you tell your board of directors about investing hundreds of millions of dollars in new plants in the United States that will not be completed for several years?<\/p>\n

Commit money to building the plants, and look like a jerk when Trump changes the tariff situation?<\/p>\n

Commit money to building the plants, and realize several years from now that the combination of low unemployment and mass deportation makes it impossible to hire the necessary employees?<\/p>\n

Choose not to commit the money, and look like a jerk when Trump changes the tariff situation in some other way?<\/p>\n

Or just sit on your thumbs, because the president is entirely unpredictable, and your board surely won\u2019t fire you for avoiding risk and standing pat?<\/p>\n

The same thinking holds true for every other business in America.\u00a0If Trump\u2019s idea is to rebuild American manufacturing \u2014 to onshore jobs from Canada or Mexico or China or anywhere else in the world \u2014 then tariffs must be imposed for years to give businesses economic space to build new plants.\u00a0A mere four years \u2014 a presidential term \u2014 is short for those purposes, but four weeks, or four days, or four minutes, before Trump changes his mind about tariffs is plainly not enough.<\/p>\n

If Trump wants to use tariffs for short-term deal making \u2014 coerce Colombia into accepting folks deported from the United States, and then remove the tariff \u2014 that\u2019s fine, but that use of tariffs will never result in jobs being onshored.\u00a0An administration must decide on its goals and then pursue those goals as though they matter.<\/p>\n

Trump has a short time to establish his credibility with businesses, but he\u2019ll quickly become the boy who cries wolf. If he keeps imposing \u2014 and then removing \u2014 tariffs, businesses will soon decide simply to wait for a new administration, when the president is rational and the business environment more certain.<\/p>\n

There\u2019s a price to be paid for being erratic, and the price is precisely the thing that Trump should most desire \u2014 more business investment in the United States.<\/p>\n

\n

Mark\u00a0Herrmann\u00a0spent 17 years as a partner at a leading international law firm and later oversaw litigation, compliance and employment matters at a large international company. He is the author of\u00a0<\/em><\/strong>The Curmudgeon\u2019s Guide to Practicing Law<\/em><\/strong><\/a>\u00a0and\u00a0<\/em><\/strong>Drug and Device Product Liability Litigation Strategy<\/em><\/strong><\/a>\u00a0(affiliate links). You can reach him by email at\u00a0<\/em><\/strong>[email\u00a0protected]<\/em><\/strong><\/a>.<\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/em><\/strong><\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

(Photo by Win McNamee\/Getty Images) Suppose you\u2019re the chief executive officer of an automobile company. You\u2019ve done precisely what NAFTA (and the slightly revised version of NAFTA, the United States-Mexico-Canada Agreement) suggested you should do. To minimize the costs in your supply chain, you have a factory in Canada that manufactures tires.\u00a0You have a factory […]<\/p>\n","protected":false},"author":3,"featured_media":111619,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-111667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/xira.com\/p\/wp-content\/uploads\/2025\/03\/donald-trump-GettyImages-1152627372-Y4NOYP.jpeg?fit=1024%2C683&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/111667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=111667"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/111667\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/111619"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=111667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=111667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=111667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}