Trump Launches Trade Wars, Warns Americans of Economic 'Pain'
Plus: Trump's dramatic reshaping of US govt. & six more weeks of winter?
Was this email forwarded to you? Sign up!
Good morning,
Or is it? Punxsutawney Phil is predicting six more weeks of winter after seeing his shadow Sunday morning.
The good news is that Phil is not always right — actually, he’s been wrong 70% of the time in the past decade.
The better predictor: Staten Island Chuck, who has been right 85% of the time. He did NOT see his shadow and is predicting an early spring in 2025!
17 other groundhogs across the country take part in the weather-predicting festivities on Feb. 2.
The scientific approach: The Old Farmer's Almanac put out its 2025 spring weather forecast, expecting "warmer-than-normal temperatures for most of the country, with a few exceptions: southern and central California, Desert Southwest, southern Florida, and western Ohio Valley, where it will be near to below normal."
Stay warm out there!
Mosheh, Jill, Sari, & Lauren
📌 TRUMP TARIFFS SET TO TAKE EFFECT TUESDAY, SPARKING TRADE WAR WITH ALLIES
President Donald Trump announced tariffs on imports from Canada, Mexico, and China over the weekend, citing concerns over illegal immigration and the influx of fentanyl into the U.S. He previously voiced this plan on the campaign trail, saying tariffs would put pressure on countries to comply with U.S. demands. Trump has not been specific about what Mexico and Canada need to do to get tariffs dropped.
The tariffs, set to go into effect Tuesday at 12:01 a.m. ET, include a 25% levy on all goods from Canada and Mexico. The one exception is Canadian energy products — like oil and electricity – which will see 10% tariffs. Imports from China will also face a 10% tariff.
What are tariffs? Tariffs are essentially taxes paid by importers bringing goods into the U.S. They are typically passed along to consumers with price increases.
The goal: To encourage U.S. consumption of domestic products, while punishing foreign entities, as well as generate revenue for the U.S. government.
Trump acknowledged on Sunday that Americans might experience "some pain" economically as a result of these measures.
A LOOK AT THE IMPACT
From Wall Street to Main Street, economists expect tariffs will increase costs for American consumers and hurt the economy overall.
Inflation: Economists warn that tariffs would increase inflation by 0.54 percentage point this year. Inflation was already running at a 2.9% annual rate in December — above the Federal Reserve’s 2% target.
Economists warn tariffs could also cause U.S. GDP to fall by 1.5% this year and 2.1% in 2026 — last year it grew 2.8%.
Groceries: Prices on kitchen staples like avocados, tomatoes, maple syrup, and certain types of alcohol – much of which we import from Canada and Mexico – are expected to rise.
Other products: Tariffs are expected to increase prices on housing and cars — with Canada and Mexico accounting for more than two-thirds of essential construction materials and more than half of auto parts used in the U.S.
Phone, computer, clothing, and gas prices are also expected to increase.
Home prices could also increase with materials and lumber from Canada all seeing tariffs.
Bottom line: The nonpartisan, nonprofit Tax Foundation predicts the average U.S. household will spend $830 more this year due to tariffs.
The U.S. Chamber of Commerce, one of the largest lobbying groups in the U.S., warned the tariffs "will only raise prices for American families and upend supply chains."
Shawn Fain, president of the United Automobile Workers union, said the union supports tariffs to protect U.S. manufacturing, but criticized their use for non-economic purposes.
COUNTRIES RESPOND
Canadian Prime Minister Justin Trudeau announced a matching 25% tariff on $155 billion worth of U.S. imports to Canada, including alcohol and produce. He emphasized that a trade war was unavoidable and urged Canadians to avoid U.S. products and consider alternative vacation destinations.
Mexico’s President Claudia Sheinbaum said she plans to announce retaliatory tariffs on the U.S. today.
She also rejected Trump’s accusations that the Mexican government has collaborated with criminal cartels.
China’s Ministry of Foreign Affairs said the country’s government “firmly deplores and opposes this move and will take necessary countermeasures to defend its legitimate rights and interests.”
Trump included a clause in his executive order that allows the U.S. to raise tariffs further if countries retaliate.
Big picture: These are the U.S.’s three biggest trading partners. But tariffs will hit Canada and Mexico much harder than the U.S. The U.S. is both country’s biggest importer, and trade makes up about 70% of their economies’ GDPs. America’s neighbors are much smaller economies, with their combined gross domestic product equaling just 1/7 of the U.S.’s $27 trillion. The tariffs risk pushing Mexico and Canada into recession, as both nations send 3/4 of their exports to their bigger partner. The US sends just about 1/3 of its exports to Canada and Mexico combined.
We’ve been here before: In 2018, Mexico imposed retaliatory tariffs on $3 billion worth of steel, pork, and other goods, in response to to the Trump administration’s 25% steel and 10% aluminum tariffs. The U.S. eventually backed down.
The latest tariffs could be a negotiating tactic for Trump. The problem is, the countries are unclear what he wants exactly, since he has not made specific demands regarding immigration and fentanyl trafficking.
📌 ELON MUSK GOES ON WEEKEND BLITZ TO SHAKE UP U.S. GOVERNMENT
This weekend brought dramatic changes across several U.S. government agencies, as Trump ally Elon Musk — the world’s richest person and head of Trump’s Department of Government Efficiency (DOGE) — moved swiftly to reshape the federal government.
The shake-up includes job cuts, restricted access to online systems, and website takedowns – creating chaos, confusion, and fear among government workers.
FIRST ORDER OF BUSINESS
Several of Musk’s top aides have taken control of the Office of Personnel Management (OPM), which functions like the U.S. government’s human resources department for more than two million federal workers.
Last week, more than two million federal employees received an email from the OPM, offering resignation packages with eight months of severance pay.
Then, over the weekend, senior civil servants at the OPM were locked out of important department databases, containing sensitive personal information.
Musk’s team reportedly set up sofa beds in the OPM Director’s Office, to allow for working around the clock. They consider the department ground zero in their efforts to cut spending across various government agencies.
As the leader of DOGE, Musk was initially expected to work outside the government and make recommendations for department cutbacks. Instead, it seems he is inserting himself directly into agency operations.
OVER TO THE TREASURY
The Treasury Department granted Musk's DOGE team access to a secure payment system that handles $6 trillion in federal payments annually: including Social Security and Medicare, tax refunds, government worker salaries, and payments to government contractors and grant recipients.
This unprecedented access followed the resignation of a long-time career official who resisted Musk's request to get into the system.
Critics, including Senator Ron Wyden (D-OR), have raised concerns over potential conflicts of interest, as Musk’s team has control of funds that pay out grants and government contracts to companies that may compete with his vast portfolio.
SHOWDOWN AT USAID
The U.S. Agency for International Development (USAID) also faced a standoff with Musk's deputies over the weekend.
Two top security officials at USAID were put on leave from their posts after they refused to let eight DOGE officials — not all of whom have proper security clearance — access restricted spaces in their offices.
Despite resistance, DOGE officials gained access to at least some of USAID’s classified files on Saturday.
USAID, which manages $40 billion+ in annual foreign aid to over 100 countries, has been under attack by Trump, who has said he plans to fold it into the State Department. It had more than 10,000 employees before Musk started cutting people this weekend.
USAID programs around the world that help developing countries with everything from measles to AIDS to other urgent needs have been frozen overnight.
By Sunday, USAID’s website and social media accounts had vanished. Over 60 senior officials at the agency were placed on administrative leave last week, along with hundreds of contractors.
✔︎ Mo News Reality Check: The administration is moving at a tech-industry pace — "move fast, break things" — which contrasts with the government’s typically slow, methodical approach. These changes could result in the long-term impacts that Trump and Musk are aiming for (namely, making government much smaller and cheaper); but in the short term, they are causing panic, chaos and confusion for millions of government employees and companies that depend on federal agencies for guidance.
Musk has said his plan is to reduce $2 trillion (or 30%) from the federal budget per year, through technology, deregulation, and budget cuts.
Democrats have called many of his actions unlawful and politically motivated. Look out for legal challenges in the coming days.
⏳ SPEED READ
🚨NATION
📌 Senior FBI leaders ordered to retire, resign or be fired by today (CNN) FBI executives ousted and personnel under internal review as Trump DOJ fires Jan. 6 Capitol riot prosecutors (CBS)
📌 Trump says he opened California’s water. Local officials say he nearly flooded them. (POLITICO)
📌 7 killed after Medevac flight transporting pediatric patient crashes, explodes near homes in Philadelphia. (FOX)
📌 3rd Black Hawk soldier killed in DC crash identified (ABC) Data from the deadliest U.S. air accident in 24 years show conflicting altitude readings (AP)
🌎 AROUND THE WORLD
📌 Rubio tells Panama to reduce Chinese influence in canal area or face US action (GUARDIAN)
📌 American-Israeli Keith Siegel, 2 other hostages released in Gaza in 3rd exchange of Israel-Hamas ceasefire (CBS)
📌 Israel’s Netanyahu heads to US to discuss ‘victory over Hamas’ with Trump (AP)
📌 Greece’s ‘Instagram island’ hit by 200 earthquakes, sparking school closures and warnings to avoid indoor gatherings (CNN)
📱BUSINESS, SCIENCE & TECH
📌 Elon Musk's X sues Lego, Nestlé and more brands, accusing them of advertising boycott (NPR)
📌 To help pay for Trump tax cuts, new taxes on worker benefits become GOP target (CNBC)
📌 Barnes & Noble to add 60 new stores as bookstore revival picks up speed (AXIOS)
🎬 SPORTS & ENTERTAINMENT
📌 Grammys 2025: Red carpet looks, winners, biggest takeaways (NBC)
📌 Sean ‘Diddy’ Combs taken from prison to hospital late at night for knee pain (PAGE SIX)
📌 Karla Sofía Gascón says she will not withdraw from Oscar contention over past comments: ‘I have not committed any crime’ (CNN)
📌 Beyoncé announces Cowboy Carter Tour 2025 — without tour dates (VARIETY)