- Interpreter: President Trump has discovered one of the most aggressive tariff orders In recent history, after the announcement of significant campaigns on similar China, India and the EU, as well as a 10% blanket for all other countries. While President Trump’s bruises in a foreign program may have shaken markets, his approach is not something new.
President Donald Trump says he wants to align game conditions with Tariff agenda He announced this week. As economic sanctions Perhaps to achieve their goals, experts are afraid that aggressive foreign policy can also isolate the largest economy on the planet.
This week, the White House has thwarted decades with some of the closest trading partners. For example, the EU will be subject to 20% tariffs, while China threatens a 54% cumulative hike.
And when President Trump said that “all countries” would be subject to liberation day, he meant it. Nations that have not received a given tariff face an immediate, 10%duty.
During the hours after the pink garden turn to foreign leaders began to formulate their answers. Some, like UK Prime Minister Sir Kire Starmer, said they would hold a “cool head” if negotiations continue, while the President of the European Commission Ursul von der Leyen promised Swift and constantly retaliations when agreements cannot be concluded.
The final question remains: will President Trump’s protectional order pay off? Will it be able to make America again the cost of burnt bridges?
Or will it fall into the pitfalls expressed by their predecessors?
What is the purpose of Trump?
Minister Finance Scott Insent outlined in his Confirm the hearings The purpose of President Trump’s tariff plan.
Some are linked directly with People and businesses of America– For example, the creation and protection of jobs in the US, increasing industrial potential, making domestic products more competitive and attracting income to financing investment for families and businesses.
Other goals related to the promotion of America’s position in the world stage – for example, a decrease in dependence on rival countries – especially when it comes to national security needs – as well as the use of economic sanctions to promote US security interests
Of course, the first raft of tariffs by President Trump announced anything of these things: the tools were used as negotiation tools in the Immigration Discussion and the delivery of fentanyl in the US
Colombian professor Britta’s house It states that there is another motive for Trump, as evidenced by the fact that the White House has implemented both individual and tariffs. he said Wealth: “The President likes to create a situation where other countries or people have to come and trade with it. Having set different tariff rates based on the country, it creates a situation where each country must provide and ask and negotiate with the White House on an individual basis.
“This is the essence of such a force that the bully and autocrats are trying to create by dividing people and ensuring that it is very difficult for them to unite and negotiate with a single voice.”
Hack the tariff code
Other economists take a different view that is partly caused by the White House, which divides its methodology of how it formulated the tariff rates: essentially accepting the trade deficit between the US and the country, sharing the total amount of goods imported from this nation and divided into two.
“(Tariffs) is first and foremost eliminating dependence on the rest of the world – or what is perceived as (American) excessive dependence on the rest of the world and other countries,” – explained Joao GomezSenior Vice -Decan Studies at the University of Pennsylvania, Wharton Business School.
“The elimination of trade deficit is the most important thing if you look at the numbers and understand how they compete, it is just obvious that they want to literally eliminate trading remains. They believe that it is unacceptable vulnerability … It is not only about politics, not selling nationalism.
“It is about fundamental economic principles, and I may disagree with them, but at least I better understand what they want to achieve, and I think it helps in predictability.”
What was done earlier?
For economists who pursue comparisons in remotely similar politics from the White House, they had to get rid of history textbooks – and return the pages for centuries.
In 1930, As the world fell into great depressionPresident Hoover has signed the tariff for the tariff at Smoot-Hawley, trying to protect US business and farmers from insufficient cheap agriculture imported from abroad.
To the Smoot-Hawley, the average import of imports was approximately 35.7%, according to Douglas Irvin’s calculations, a professor at the Dartmut University, and after the bill increased to 41.1%. Similarly, the Fordney McCumber tariff law entered into force in 1922, hiking from 21% to 38.8%.
By comparison, 10% Trump has placed, for example, in the UK, or 20% located on the EU, seems relatively more restrained.
However, the economy continued in 100 years since the last major tariffsGlobalization continues to build up Since then, the US economy has been more closely linked to the health of its partners.
According to Irwin Dartmut, in 1930 and 1922 he imported as a percentage of GDP presented A total of 1.4% and 1.3% respectively. By 2025, even the tariffs announced by April 2 (those in Canada, Mexico, and the initial 20% in China) were imported less than 5% of America’s GDP.
Thus, the decrease in tariffs for a much larger share of goods – and potential mutual tariffs from the rivals – can be a more painful pill than the fewer goods at a higher rate that has survived in the past.
While President Trump himself used Smoot-Hawley as a justification for his tariff action, Gomez Wortan said Wealth Both cases are so far away that it is “inappropriate comparison”.
At the simplest level, he explained: “I would say, a) (1930s) was a recession to start, b) we had a gold standard, and the monetary policy was all about protecting the gold standard, which led to a huge deflation.”
Transatlantic examples
Tariffs can be useful for negotiations in the sense of negotiations and – putting in the one you ask – can bring some economic benefits.
Cambridge University Professor Macroeconomics Michael Kittson He admits that he is in the minority of his peers when he emphasized the total tariff imposed by the UK in 1932, perhaps the economy has brought some contracts – for example, it indicates a splash of production between 1932 and 1937.
However, the 10% duty imposed by the UK was far from the extensive changes made by President Trump, and Kitson emphasizes the conditions that allow any benefit to the UK economy, not present in 2025 in America.
These “peculiar conditions” included high unemployment (unemployment rate in the US is currently Sustainable 4.1%(
And, first of all, there was no great potential for other countries to avenge (for example, the EU can now add a penalty of US export exports, which it could not do before).
“Most of these conditions are now not extended to the US,” Kittson said WealthSaying that not only these conditions are not fulfilled, there are complex factors that repel the US economy even more from the success of tariffs.
“The fact that we now have much more complex supplies than in the 1930s, which makes the tariffs more difficult and are likely to be negative,” he added.
Is there a merit in the theory of hard reset?
The S&P 500 Tanking 5% Trump’s politeness is the opposite of the fact that many analysts expected it when it first won the oval office.
This made some reason to think whether the intention of President Trump will develop a “tough reset”, and the economy slowed down to stop inflation, reduce interest rates and weaken the dollar – all this creates a more stable economic landscape for Republicans to manage.
Initially, many analysts rejected the theory as conspiracy. However, Kevin Ford, FX and Macro -Strateg in Convera comes to the concept: “I begin to see the reasoning, at least in part, especially when I see Trump and his office that moves his attention to the debt market.
“In the last four Trump union’s returns in the stock market, often speaking about its high rates. But recently he, and his team fell silent on the front, instead paying attention to a 10-year yield. Many people thought that the so-called” Trump put “to enter and stabilize the latest decisions.”
Ford added that the adoption of the “disruption” compared to the promises of the Golden Age in accordance with Trump is additional indicators, saying: “I do not think that the administration strives for the bear market or a sharp economic recession. But if the destruction of the financial assets are the price for payment seems to be ready.”
Of course, the economic trajectory of the J-Kraiva (a short immersion to dramatic benefits) would serve as a cooling of the activity without causing the recession, but Ford added: “Their law on balancing policy can even call it a gambling game, if you take into account in immigration, home.
“This is a big sign of the question, but over time, the idea of an engineering economic transfer of J-Kraiva no longer seems so far-fetched.”
The forgotten service sector
Most of the back of the tariffs have a vivid inaction: motivation for this stock is based on a deficit of goods, ignoring the huge sector of services in America, which, which, which falls by two -thirds of the country’s economic activity.
Really, in the White House Fict Confirmation of the tariffs does not mention the service sector once – in spite of what it is The largest exporter of services in the world.
The influences that these tariffs will have on the sector cannot be ignored, said Ebeach JohProfessor of Business Administration Harvard Business School.
Iyoha must release a working document on The influence of tariffs on SMEs In partnership with Business Network, which can be carried out until April 2. Respondents did not know about the tariffs that were already set to China, Canada and Mexico, added, perhaps, of course, for the founders and entrepreneurs without a big team.
However, Joh said that the influence of foreign policy on the business sector cannot be noticed by telling Wealth: “Some firms in our sample are firms that are in the tourist sector. If we think about the consequences of these tariffs for people’s readiness, for example, visit the United States to spend on these service sectors in which these small businesses work, how can we balance this?
“There was a lot of attention (in) the rhetoric of trade policy on goods, but they don’t really think:” How the US used global trade services, and how (small business) used this global trade integration. This is what I think is constantly lacking in the conversation. ”
Originally this story was presented on Fortune.com
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2025-04-05 09:25:00
Eleanor Pringle
