President Donald Trump has supported tariffs for years. His growing trade war is sure to ripple over the world economy for a long time.
This is because strengthening tariffs on foreign governments frequently elicit retaliation. This is a possibility that even the industries Trump is aiming to support are already mandatory. He has been rolling out a constantly changing series of import taxes for months, but the sweeping “mutual” tariffs he announced on Wednesday have opened up salvos to what was painted on the tats, potentially drawn with dozens of governments.
Unlike the narrow target tariffs Trump imposed on certain countries and products in his first semester, his latest obligations are set to rewrite the rules of world trade at a much broader level and in an environment where inflation is getting hotter.
“This is a game-changer for the global economy, not just for the US economy,” Orsonora, head of US economic research at Fitch Rating, said in a note Wednesday evening.
“Many countries will probably be in a recession. If this tariff rate has been going on for a long time, you can throw away most predictions through the door,” she said, adding that the level Trump is introducing hasn’t been seen since 1910.
Already, the administration has shown no interest in diplomacy, increasing the likelihood that foreign leaders will fight back on their own collections with more taxes rather than seeking meetings.
“This is not a negotiation,” a senior White House official told reporters Wednesday evening. “It’s a national emergency.”
The European Union threatened measures by mid-April, and Canada warned last week that it was preparing a retaliatory move to quickly respond to trade measures the US announced on Wednesday.
The legal powers Trump has called for mutual tariffs (ranges from 10% in some countries to 54% in others) allow them to avoid many of the typical steps to enact new trade barriers. The use of emergency not only allows the White House to impose tariffs immediately, but also leaves room for trade wars to remain free, and the administration could more or less adjust its collection on the spot until the end of Trump’s term.
Senior automotive executives criticized the 25% tariff on foreign-made vehicles and auto parts, which was announced last week as a “process salad.” This contrasts with typical trade policy movements, and tends to make industry stakeholders more clear about change and how they prepare for it.
“We will characterize this tariff slate as worse than the worst-case scenario,” Dan Ives, global technical research director at Wedbush Securities, said in a note to his client on Wednesday evening.
Still, he continues to believe that there will be major negotiations with lamps over the coming months, along with various countries and businesses, to navigate this new world.”
But Ives and other analysts warn that the unfolding trade war is packed with unknowns and could result in much greater potential than Trump’s previous trade policy moves, including his first mission in the oval office.
“Trump threw the game into a mountain of craters that has already weakened, explosive craters,” said David Beckworth, a former U.S. Treasury economist who is a senior research fellow at Mercatus Center, a libertarian think tank, on Wednesday. “These new tariffs are the perfect recipe for stagflation and lost midterm elections.”
Trump spoke about his tariff agenda goals in categories and sometimes crazy on Wednesday, describing the US as “populated, plundered, raped and plundered” by his trading partners. He vows that domestic industry will be “reborn,” and the “golden age of America” is approaching.
For now, however, industry investors and corporate leaders have speculated about what could come next. Automotive executives hoped that the US Mexican-Canada agreement Trump negotiated in his first term would eventually replace it with two separate trade deals with each of his North American neighbors.
Economists and business leaders still have certainty. A typical household could pay more.
“Consumers should expect to see prices high at everything from food items to home renovations to car insurance,” Jake Colvin, chairman of the National Council of Foreign Trade, said in a statement. “There is no way to alleviate the additional costs of input into finished products from the administration’s complex and growing network of tariffs.”
The extent to which the web has stretched, who is being caught, and the holes engraved within it remain unseen.