President Donald Trump’s so-called reciprocal tariffs are now in place, creating self-inflicted choppy waters, as RMS Trump sails on through a flog of confusion, dealing a thunderous blow to the world economy as he pushes forward efforts to drastically reorder global trade.
Trump argues that the taxes will boost US prosperity and revive domestic manufacturing, but his approach has drawn criticism from Wall Street, economists and some in Trump’s own party, who have questioned the administration’s methodology and warned of an economic fallout that could include higher consumer prices and slower growth, if not a recession. He has long argued for tariffs as a solution for his trade grievances, this plan will reassert US power, revive domestic manufacturing and extract geopolitical concessions.
He signed an executive order raising reciprocal tariffs on China to 84%, up from the 34% announced on April 2. With 20% in existing duties already in place, the total tariffs on Chinese goods now amount to 104%, along with import taxes on roughly 60 trading partners that run trade surpluses with the US. That comes after a 10% baseline tariff for most US trading partners took effect Saturday.
Asian countries are bearing the brunt of the measures, with Cambodia and Vietnam facing 49% and 46% charges, respectively. Imports from the European Union will be taxed at a 20% rate.
All of this, the president and his administration have repeatedly promised, will lead to a future boom, both economically for the US and politically for his party.
“We’re going to win the midterm elections, and we’re going to have a tremendous, thundering landslide,” Trump told Republican lawmakers and donors Tuesday. “I really believe that.”
The truth is, the economic sea has gotten very stormy, and there are indeed icebergs out there, but the as to who will get through safely, and who will go down with the ship is too hard to call.
Gold remains a relative safe haven, sitting just over 3,060 USD per oz, but commodities are down with WTI Oil at 58.19, and Brent at 61.44. and Bitcoin was last at 77,764.
As I discussed last week, much of the pain will be born in the US, as globalisation, which benefitted some but not all unravels. Beyond that new trade patterns will emerge, but meantime markets will remain tossed about by the currents and tides so batten down the hatches.
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