President Trump announced a sweeping set of tariffs on Wednesday that threaten to trigger a global trade war as governments around the world say they will respond. The shift in US policy marks the biggest change to global trade in a century. The core change is a universal tariff of 10% on all imports, plus additional tariffs on the “worst offenders.” A notable exception: Russia. A White House official says Russia is “not on this list because sanctions from the Ukraine war have already rendered trade between the two countries as zero.”
The new tariffs announced by President Trump represent “a game changer, not only for the U.S. economy but for the global economy,” says Olu Sonola, head of US economic research at Fitch Ratings. “Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”
A crucial conflict sits at the center of Trump’s tariff policy: raising revenue for the US vs. increasing America’s industrial base, notes St. Joseph’s University economics professor Nancy Ruth Fox. “If I continue buying goods that are produced abroad, that will bring in tariff revenue. But it won’t do anything for American production, not anything, but just at a very simple level,” she explains. Meanwhile, if American consumers switch to buying domestic goods, tariff revenue declines.
Companies around the world brace for a new world order in the wake of higher US tariffs. The expected blowback includes raising prices, reducing shipments and reducing investment activity. “The reality is stark: these tariffs will push prices higher on thousands of everyday goods – from phones to food – and that will fuel inflation at a time when it is already uncomfortably persistent,” says Nigel Green, CEO of global financial advisory deVere Group.
Tech lobbyists are “cautiously hoping” that Trump’s tariff policy will benefit their industry, reports Politico. “We need to hold our trading partners accountable if they’re not giving our exporters a fair shake in markets abroad,” said Matthew Schruers, president and CEO of the Computer & Communications Industry Association. “Tariffs are one tool in the toolbox,” adding that tech lobbyists are “encouraged there’s a conversation underway here.”
US tariffs, under President Trump’s direction, have increased sharply to levels last seen in the late-1800s. The Economist reports: “Businesses, investors and diplomats are still trying to wrap their heads around the details of Mr Trump’s new tariffs. But when looked at in totality, they appear to be bleaker than many of the worst-case scenarios for his trade policies envisioned even just a few days ago. Imports into America will now face a weighted-average tariff rate of 24%, according to Evercore ISI, a research firm. That is a dramatic increase from 2% or so last year.”