Tariffs are a bad policy based on a misunderstanding of economics. Even if you have a protectionist mindset, Trump’s tariffs make no sense because they don’t focus on tariffs goods that we could produce and provide our consumers; they focus on inputs to things we want to produce like steel, aluminum, and autoparts. Many more people use steel and aluminum that produce it. This makes tariffs bad before we even consider retaliatory tariffs from other countries.
The uncertainty of what tariffs will look like prevents businesses from investing and consumers from making large decisions, causing further damage.
“”The trade war is now turning into a direct confrontation between the US and China … we could again be seeing escalation and de-escalation at the same time, pulling markets in different directions,” Rabobank analysts said.
And though a wider trade war is on hiatus, risks remain to the health of the US economy, and Trump’s move is “merely the end of the beginning,” according to JPMorgan.
Other parts of the president’s trade-policy overhaul are still in effect, including a 10% baseline tariff on most trading partners, 25% duties on steel and aluminum imports, and 25% duties on auto imports. Those elements could still lead to consequences analysts have warned about, such as rising prices and slower economic growth.”
“The EU can apply retaliatory tariffs on nearly €21 billion of U.S. products like soybeans, motorcycles and orange juice after the bloc’s 27 countries assented to the measures on Wednesday, the European Commission announced.
“The EU considers U.S. tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy. The EU has stated its clear preference to find negotiated outcomes with the U.S., which would be balanced and mutually beneficial,” the EU executive said in a statement.
Hitting back against U.S. President Donald Trump’s steel and aluminum tariffs, the European Union’s countermeasures will apply in three rounds. Measures covering €3.9 billion in trade will go into force next week, with a further €13.5 billion from mid-May and a final round of €3.5 billion following in December.”
“San Antonio sends almost half its exports to Canada, which makes the Texas trade hub one of the most vulnerable U.S. cities in the tariff war.
Mayor Ron Nirenberg says one in five jobs in his state is exposed by President Donald Trump’s new tariff regime — “300,000 jobs immediately on the block.””
“President Donald Trump on Wednesday announced a 90-day pause of the higher tariffs against 60-odd trading partners that went into effect earlier Wednesday, with the exception of China — an abrupt reversal of his market-rattling trade policy.
Trump, in a Truth Social post, said he plans to keep the administration’s global baseline tariff increase of 10 percent in place for all countries.
But tariffs he imposed on China will continue to rise, Trump wrote, increasing to 125 percent, due to Beijing’s continued retaliation.”
“The trade war is likely to cause fewer jobs and higher prices, a top Federal Reserve official tells Axios. But price hikes may not show up until the summer, as companies work through pre-tariff inventories.”
“Trump argues that tariffs will stimulate the U.S. economy by boosting domestic production, which is possible only if tariffs make imports more expensive. Yet Trump is loath to admit that tariffs collected from importers translate into higher prices for U.S. businesses and consumers.
“China is eating the Tariffs,” Trump claimed during his first trade war. The upshot, he said, was that “cost increases have thus far been almost unnoticeable.” If so, there was little reason to expect that tariffs would help U.S. companies at the expense of their foreign competitors.
Trump is still pushing these contradictory claims. The White House claims tariffs “do not raise prices” yet somehow “create new incentives for US consumers to buy US-made products.”
During a recent interview, by contrast, Trump admitted that his 25 percent tariff on imported cars might make them more expensive. “I couldn’t care less if they raise prices,” he said, “because people are going to start buying American-made cars.”
Even that concession was misleading, because those “American-made cars” frequently incorporate foreign-made parts, which are also covered by Trump’s tariffs. Overall, Yale’s Budget Lab estimates, Trump’s tariffs will raise car prices by 13.5 percent, adding $6,400 to the cost of “an average new 2024 car.””
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“Trump ignores that tradeoff too, pretending tariffs can be a reliable source of easy revenue even though they are designed to shrink the flow of the products on which they are levied. As Trump tells it, we can tax ourselves to prosperity at no cost to Americans and use the windfall to tackle the federal government’s looming fiscal crisis.
If all that is true, it is a mystery why Trump also presents tariffs as a bargaining tool that can be used to extract concessions from other countries, such as assistance in border control and the war on drugs. Such threats work only if Trump is willing to forgo the supposedly unalloyed benefits of tariffs.”
“The 2018-20 tariffs raised consumer prices for goods like washing machines, cars, and electronics. According to economists at the Federal Reserve and several universities, American consumers bore nearly the full cost, while protected domestic industries captured only modest benefits.
With a much broader set of tariffs now on the table, lower-income families who spend the largest shares of their income on goods—and who have been badly hurt from the recent inflation—will likely suffer the most. That’s a dangerous proposition in an economy already wrestling with persistent cost-of-living pressures.
Here’s where things go from damaging to disastrous: If the administration follows through with both expensive new tariffs and more bailouts while simultaneously extending expiring tax cuts and adding new tax breaks without corresponding spending cuts, the result will be a fiscal black hole.
It’s true that Elon Musk and the Department of Government Efficiency are cutting spending and that the administration is rolling back many of the costly regulations inflicted by the Biden administration. It also wants to free the energy sector and generate more energy abundance. But it will take a long time to realize the benefits of these efforts, if they ever materialize. After all, many of these changes require congressional action, and Congress of late has been missing in action.
Trump’s tariff strategy is worse than a gamble; it’s a sure-fire loser. Experience proves that policies motivated by economic nationalism are all pain and no gain. The details of the long-run damage remain to be revealed. However, in the short term, we know for a fact that Liberation Day will hurt farmers, burden consumers, and further bloat the budget deficit—all oh-so-misleadingly in the name of “America First.”
What America really needs are open markets, fiscal responsibility, and stable trade relationships—not a rerun and enlargement of the last trade war.”
“trade isn’t some state-level exchange in which one government mugs another. It takes place voluntarily between individuals and businesses.”
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“”In their criticism of global trade and imports, Vance and the GOP platform don’t mention several important things: the American consumer, private property, and the freedom that people should enjoy to voluntarily exchange goods and services,” he noted. “Some folks call this liberty and the pursuit of happiness: people freely choosing to buy and sell what they want, not what the government dictates.”
And what do we call voluntary exchanges between willing participants? Well, as economist Roy Cordato wrote for the John Locke Foundation in 2018, “all trade, by definition, is reciprocal. It is best to think of a trade as simply two parties coming together for mutual gain with each of them giving up something that they possess for something that they want more.”
So, in order to eliminate trade deficits with other nations that aren’t really a problem to begin with, the Trump administration is hiking tariffs to raise the cost of imported goods so that Americans will buy less of them. That’s interference in the free reciprocal exchanges chosen by consumers and businesses. And the price of that interference comes out of Americans’ pockets. That’s because, as the Tax Foundation’s Alex Durante warns, tariffs are taxes that, while partially paid by foreign firms, are mostly a burden for people in the countries that impose them—especially as they rise to the heights we now see.
“If the US imposes a large enough tariff, the resulting reduction in economic activity would also entail a meaningful increase in unemployment,” adds Durante.”