Donald Trump has long proclaimed a “tariff man” who is willing to impose payment of imports from countries that hurt America.
But on Saturday, the 78-year-old US president took the first dramatic step of his second term according to practice and visions-staring of trade wars and economic nationalism to the top of his agenda.
From his estate MAR-a-stature in Florida, Trump has released the aggressive new tariff on imports from Canada, Mexico and China, the day after threatening the EU high levies.
Trump is gambling that he can press US trade partners to adhere to Washington’s desire without starting another harmful acceleration of inflation, at a time when living costs remain the main concern of many Americans.
For the world, Trump’s introductory gambit at trade means that a number of countries will be forced to negotiate with the trade deficit and currency policies to immigration, and even new US wishes for territorial expansion. The financial markets could be shaken and a global economy can suffer.
“These tariffs announce a new era of American trade protectionism that will affect all US trade partners, whether rivals or allies, and will significantly disrupt international trade,” says Eswar Prasad, a professor at Cornell University.
The most severely affected economy will be Mexico and Canada, given its great reliance on the American economy, with both faced with direct recessions if Trump maintains 25 percent of tariffs, economists said. The damage will be assembled by the fact that these countries have signed a new trade agreement with Trump less than six years ago in the hope that it will stabilize relations with the US.
“There is no safe haven,” says Brad Setser, a former US treasurer, now in the Foreign Relations Council. “Two countries that in their first term reached the largest trade agreement with Donald Trump are the first two to hit the tariffs.”
Neil Shearing, the main economist of the group in the capital economy, said that the macroeconomic effects would depend on how much a comprehensive package of US tariffs is and how fast it is.
Some of the influence could be mitigated by the respect of the dollar and the substitution of US goods in the country, while corporations can decide to absorb some of the costs of lower profit margins, economists said. But the strength of Trump’s first steps – if fully spent – has appeared far greater than limited trade wars against China and the G7 allies during his last time in power.
“This could be a trade war against steroids,” said Ryan Sweet, a major American economist of Oxford Economics. “The first round was more targeted. Now it seems like they go over the board – and faster than I expected,” he added.
Everett Eissenstat, a former Trump economic advisor who is now in Squire Patton Boggs, said: “I expected the tariffs to enter a more measured way. But we can say that there is one direction here, which is that it seems to escalate.”
The first tariffs on Mexico, Canada and China can only be the beginning. Trump officials thought about imposing universal tariffs to all imports and added the levies he imposed on Saturday.
Trump now wants to use tariffs to earn revenue to pay for the extension of the trillion of dollars of tax reduction, which can only be achieved with careful calibrated but large levies that could be difficult to turn.
“When it comes to revenue collection, if the tariff is too low, it will not raise enough money, if it is too high, it will stop trade and then you will not make money. It will have to find a sweet place,” says Bill Reinsch of the Center for Strategic and International Studies.
While Trump doubles on the tariffs, he faces a small resistance of business groups and Republicans in a free market that traditionally dealt with his populist policy and sought to re -insert him. Jim Risch, Senator Idaho, chaired by the Senate Committee on External Relations, cheered his latest moves.
“It has always been very clear President Trump that if he sees that Americans are being used, he won’t handle it,” he said. Referring to Canada, Mexico and China, he added: “These governments know very well that they should stop the flow of drugs and illegal immigrants into our country. The sooner they do, the better.”
But there are two big dangers to Trump. One would be a sale that sends stock markets and the value of US pension plans. The other would be for the inflation to be raised again after gradually falling to its goal of 2 percent in the last two and a half years.
Shearing said Trump’s proposed measures could push the inflation of PCE above 3 percent, compared to 2.6 percent. EU -AI China’s powerful views would encourage the growth of prices now even more, he warned.
“It’s a big hit, especially for workers’ families, including people who voted for Trump about the explanation that they would reduce prices,” said James Knightley, the main international economist in the USA Ing -in.
“We are risks to see some real pain because of the household sector that passes later this year, especially if it expands tariffs to Europe.”
Democrats, who sought ways to attack Trump at the beginning of their second term, have already dealt with the potential for greater inflation.
“Reducing huge gas tariffs, foods, phones, televisions and cars means working American families will pay more for the things they need,” Ron Wyden, Oregon senator said on Friday.
“These tariffs make sense only as a class warfare, forcing typical Americans to carry an account for another circle of tax breaks for Trump and his rich friends.”
Trump found comfort in the fact that inflation remained muffled during the commercial wars of his first term.
But Jay Powell, a chairman of the federal reserves, said last week that the conditions have changed compared to the structurally low-in-inflammatory environment before the pandemic. “You’re going through a situation where we didn’t go back to 2 percent and that’s just different,” he said.
For the global economy, one potentially gloomy scenario would be “a mass shock of supply,” said Knightley, similar to the shocks of economies exposed to during the Coidd-19 pandemia.
“The risk is that it will be quite harmful, especially if we see a significant answer. And I don’t see that politicians don’t respond.”
