The hectic kick off to Donald Trump's tariffs in recent days is making one thing abundantly clear: This is very different from Trump 1.0.
On an array of issues — from the speed of the duties and the wider array of consumer staples caught in the middle to Trump's plan to use tariffs for "getting everything else you want" — the president is offering a new and unpredictable approach.
Meanwhile, the rest of the world is also approaching the issue differently. In just one example, China threatened Tuesday to use probes into Google (GOOG, GOOGL) and Nvidia (NVDA) as leverage in the coming face-off.
At a Politico event on Tuesday morning, Trump's senior counselor for trade and manufacturing Peter Navarro said the president's call with Chinese leader Xi Jinping will take place today and that a tariff pause will be on the table.
"It is fundamentally different," former US trade representative general counsel Greta Peisch said in an interview, noting that Trump is now "breaking new ground in what is a trade authority, what are they used for, and how expensive the transactions will be."
President Donald Trump, flanked by Treasury Secretary Scott Bessent and Commerce Secretary nominee Howard Lutnick, answered questions from reporters on a range of topics, including tariffs, on Monday. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
How Trump is different
Trump is approaching the tariff issue this time around at a different speed and promising duties at higher levels. The current "blanket tariffs first" approach in evidence this week was absent from 2017-2020.
Trump invoked a 1977 law allowing a president to declare an emergency and act immediately as he enacted duties this week.
Trump used different — and much more gradual — authority last time. He also started talks with China and signed tariff-related executive orders in the early months of 2017 but then held off on key new duties for an entire year.
It wasn't until Jan. 22, 2018, that Trump levied duties on solar panels and washing machines. Then, in March 2018, he moved on to tariffs for steel and aluminum.
Now, during the start of his second term, the order is reversed. Trump has imposed the new duties on China even as he promises talks with China will come later this week.
In remarks to reporters on Monday, Trump called his 10% duties on China the "first salvo" in talks.
Whether these first duties stay in place for long remains to be seen, but the move has already focused consumers on the much wider array of consumer goods that could be quickly impacted — from grocery prices to clothing retailers.
"No one wanted to or expected him to go across the board on day one," said Marc Busch, who served as a formal adviser to the US government on trade issues in the Obama and early Trump years.
"If you're going to go big, you don't have a lot of ability to dodge the consumer final goods," he added.
The China-only blanket move, which represents a fraction of what Trump said is coming, will also be felt across the economy. The Tax Foundation estimated that these China tariffs alone are poised to shrink the US economy by 0.1% in 2025 if left in place.
During Trump's first term, other than those closely watched 2018 washing machine duties, Trump 1.0 tariffs more often focused on things like industrial inputs, where consumers only saw the effects indirectly.
How this new approach actually shakes out for the economy and consumer remains to be seen. Trump summarized his broad view of the issue Monday, saying, "Tariffs are very powerful both economically and getting everything else you want."
One of the few areas of clarity at the moment is a sense that tariff threats are likely to be a feature of Trump's entire second term.
"There's a pretty provocative signal being sent," said Busch, who is now a professor of international business diplomacy at Georgetown.
The message being delivered by the focus on Canada, he added, is the that "no one is safe and [Trump] wants everybody deal-making."
How the world is different
There is another key difference between Trump's 2.0 and 1.0 trade wars: The rest of the world has had time to prepare.
"Every country is prepared for US tariffs, and they are prepared to retaliate," American Action Forum president Douglas Holtz-Eakin noted in a Yahoo Finance video interview on Tuesday. "They have been planning their retaliation to do the maximum damage on the US and the minimum on their economies."
Indeed, China has already announced a wave of retaliatory measures against the US; Canada and Mexico also said they are ready with novel new approaches — notably targets duties to make Trump allies in Republican states feel the most pain.
China's President Xi Jinping speaks during a stop in Brazil in 2024. (EVARISTO SA/AFP via Getty Images) ·EVARISTO SA via Getty Images
The Mexican government is also reportedly considering a range of tariff and non-tariff responses if talks break down between now and March 1.
One particularly destabilizing approach is an idea for "carousel retaliation" that would periodically rotate the US products up for duties and add an element of unpredictability for US businesses.
Trump's rapid-fire approach and his use of novel legal authority to act are leaving many questions up in the air.
"There isn't a lot of understanding of exactly how these tariffs apply, there's a lot of technical questions that don't have answers yet," Peisch said.
Correction: A previous version of this article misspelled the name of former US trade representative general counsel Greta Peisch. We regret the error.
Ben Werschkul is Washington correspondent for Yahoo Finance.
Every Friday, Yahoo Finance'sRick Newman and Ben Werschkul bring you a unique look at how US policy and government affect your bottom line on Capitol Gains. Watch or listen to Capitol Gains on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.
