08:14 AM EST, 02/05/2025 (MT Newswires) -- If President Donald Trump were to implement his negative trade actions against his two North American partners, the United States average tariff rate would jump to 10.5% from 2.4% and it is pure "fallacy" to believe U.S. consumers would bear nothing of this burden, said Rosenberg Research.

Rosenberg doesn't know what was said in those two phone conversations between President Trump and Canadian Prime Minister Justin Trudeau on Monday but suffice it to say that the tariffs would be extremely damaging to the U.S. economy.

Most people in the U.S. are unaware, but Canada does account for 60% of all U.S. energy imports and 30% of all inbound softwood lumber shipments, not to mention the fact that Canada sends nearly C$100 billion of transportation equipment to the U.S. annually and is integral to the U.S. automotive supply chain, pointed out Rosenberg.

The Trump tariffs would have been devastating for Canada but would have also caused unnecessary damage to the economic backdrop in the U.S. as well, it stated. That's why these moves are unlikely to happen.

However, the die has been cast, and the damage to business confidence is already a done deal: in a survey of more than 600 members by the National Small Business Association, more than half the owners said they were concerned about the prospect of tariffs, and nearly a third were "very concerned."

A repeat of the 2019 capital expenditure recession, even with AI spending, is a primary risk to the outlook. What Rosenberg knows about business capital spending is that it leads hiring intentions and, through the job market channel, the labor market, and consumer spending as well.

There is no possible way Trump would instigate a food- and fuel-induced inflation that would risk ruining his presidency just as it was getting started in whirlwind fashion, according to Rosenberg.