I made this post recently and came to the same conclusion that he is most likely
using them as a negotiation tool. The negative consequences on the economy in the current environment are significant for him to risk it in my opinion. (inflation still above 2%, rates are high, valuations are very high, yields going up even with rate cuts, huge fiscal debt and deficits)
We probably could expect some tariffs eventually, especially in sectors like autos and China, but I think the proposed ones are very aggressive to not hurt the US economy. These are the 3 biggest trade partners, and a lot of the supply chains are extremely integrated with Mexico and Canada especially.
I was listening to experts that sometimes inputs cross the border 7/8 times until the final product, and a lot of important inputs for the economy eg. energy are one of the most affected.
And also that the tariffs implemented during the last Trump administration have been found to be a net negative on the economy. While certain industries benefited, many others faced higher input costs and reduced exports due to retaliatory tariffs, ultimately more than offsetting the gains in growth and job gains. These effects would be much bigger now that Mexico and Canada are also involved.
At the same time this is Trump we are talking about, so I don’t think this is an empty threat either, but just that he is looking for negotiations first.