Paul Wiseman, AP Economics Writer
WASHINGTON (AP) – Trade war president Donald Trump has promised that he threatened the world economy and has tensed and promised long-standing US alliances in Europe and Asia.
Items imported from dozens of countries and territories are currently expected to be taxed at significantly higher rates, which is expected to raise costs from cars to clothing to computers.
These tariffs could run as high as 50%, but they are intended to punish the country for trade barriers that Trump unfairly restricts US exports and claims to carry out a massive trade deficit.
Even countries where the US enjoys a trade surplus, such as the UK and Argentina, are selling more than they buy, but are targeted at a minimum of 10% tariffs. And the best tariff is to land on two small territories that almost trade with America. It is owned by the Kingdom of Lesotho in Africa and by St. Pierre and Michelon off the Atlantic coast of Canada.
Global commerce that for decades curtailed tariff rates agreed by the United States and 122 other countries in the 1980s and 1990s. On Wednesday, Trump exploded the deal, with other countries exploiting the system and taking the United States for many years.”
“Our country has been plundered, plundered, raped and looted,” the president told Rose Garden.
Global financial markets rebounded on Thursday. On Wall Street, the Dow Jones industrial average fell by 1,394 points (over 3%), with the US dollar falling against other major currencies. This is a sign that investors are worried about the US economy.
“This is a game changer not only for the US economy but also for the global economy,” says Orsonora, head of US economic research for Fitch’s assessment. “Many countries will likely be in a recession. If this tariff rate has been going on for a long time, you can throw away most of your forecasts through the door.”
Trump is doing what he said he did
During the presidential election, Trump repeatedly spoke about imposing a “universal tariff” of 10% to 20% on all imports. And the new 10% baseline tariffs met the explanation.
He also threatened to hit imports from China with a 60% tariff, and now he is slapping “34% tariffs on China” in addition to the 20% tax he announced earlier this year.
Combining China’s new tariffs and what remains from his first term with those from President Joe Biden, the total tax on Chinese goods will approach 70%, said Julian Evans Pritchard of Capital Economics.
“It’s extreme, but it coincides with what Trump campaigned,” said Erica York, vice president of federal tax policy at the Tax Foundation.
Who knows whether tariffs will prove permanent or whether they will lower or drop them depending on other countries the US negotiates to reduce their own tariffs and other trade barriers.
US tariff rates go back more than 100 years
Even before Wednesday’s bombing, the president had abandoned his second term and took away tariffs. He recovered 25% tariffs from his first term on steel and aluminum, imposed 25% collection on cars and mild trucks, struck China with a 20% import tax, and collected 25% tariffs on Canadian and Mexican imports.
Yale University’s Budget Lab estimates that tariffs for 2025, including Wednesday, will increase the average US tariff rate to 22.5%. It rose from 2.5% last year to its highest level since 1909. This is even higher than the infamous Smoot Holy tariffs passed by Congress during the Great Repression.
Before lawmakers ratified the 16th amendment to the Constitution in 1913 and introduced the National Income Tax, tariffs provided a large portion of the federal government’s revenue. The US moved from tariffs to income taxes, raising funds to expanding governments, raising more income from the wealthy, reducing trade barriers, and encouraging competition, making the economy more efficient.
Trump wants to go back to that time and replaces income tax collection with tariffs. Last year, tariffs accounted for less than 2% of federal revenue, with 51% coming from income taxes and 36% coming from Social Security and Medicare taxes.
Tariffs could damage the US and the global economy
Yale Budget Lab estimates Trump’s 2025 tariffs will raise US consumer prices by 2.3% in the short term, costing American households $3,800 a year.
The tariffs he announced on “liberation date” alone will boost prices by 1.3%, and the lab calculates a $2,100 tax on households. Clothing prices will rise by 17% as higher import duties collide with textiles from Southeast Asia and Bangladesh.
The lab says Trump’s tariffs will reduce US economic growth (2.8% in 2024) by 0.9 percentage points this year.
The damage also extends to Europe, Southeast Asia and China. “We expect global economic growth to begin to plummet as trade flows drop, prices rise and businesses postpone investment,” said Wendy Cutler, a former US trade officer who is now vice president of the Asian Association’s Institute of Policy Studies.
Trump attacks allies and poor countries
Between so-called mutual tariffs and baseline tariffs, Trump has hit allies and enemies, rich and poor countries, and countries that have opened and closed US exports.
Scott Lincicom, a trade analyst at the Libertarian Cato Institute, said that even Singapore, perhaps the world’s most free economy, is plagued by 10% collection, claiming Trump is balancing protectionist policies in other countries.
“This is not reciprocal at all,” Lincicom said. … They may have pulled numbers from their hats.”
Taiwan, a US ally, faces 32% tariffs, less than its geopolitical rival China’s 34%.
The poor country also had the brunt of some of Trump’s most troublesome tariffs.
Lesotho, a small country surrounded by South Africa, faces 50% “mutual” tariffs, even if, for example, annual economic output per capita is less than $2,900 (compared to US $76,200).
Cambodia has an annual economic output of around $7,200 per capita, absorbing 49% tariffs. That’s partly because the White House is a conduit of Chinese-made goods and ultimately heads to the US to dodge US tariffs to China.
Canada and Mexico were relatively easy to get off
Trump’s trade policy towards his neighbors in the North and South of America was volatile. He made the announcement twice, then suspended or despised 25% tariffs on Canadian and Mexican goods. On the surface, it has made fentanyl and immigrants do more than illegally go to the US.
Last month, Trump has complied with the Canadian and Mexican goods 25% obligations in the United States and Mexico’s Canadian agreement, a trade agreement he negotiated with both countries in his first term. On Wednesday, the White House said USMCA-compliant imports could continue to enter US tax exemptions.
The White House said that once both countries meet Trump’s demands on immigration and drug trafficking, tariffs on remaining imports will fall from 25% to 12%.
“The obvious winners were Canada and Mexico,” writes Neil Shearing and Paul Ashworth of Capital Economics in the commentary.
Original issue: April 3, 2025, 3:32pm EDT
