Donald Trump won back the White House with a promise to transform the US economy. Millions of Americans, struggling with higher prices and bigger bills, elected a president who pledged to revive his country\u2019s industrial heartlands \u2013 and leave the rest of the world to pick up the bill.<\/p>\n\n\n\n
On Wednesday \u2013 a day dubbed Liberation Day by the president and his aides \u2013 Trump has vowed to pull the trigger and impose an historic barrage of tariffs on goods from overseas he claims will fund an extraordinary revival.<\/p>\n\n\n\n
Ten weeks after obtaining power, Trump has said he will raise tariffs on all products from countries that charge tariffs on US exports; hit goods from Canada and Mexico with sweeping duties; introduce steep tariffs on foreign cars<\/a>, computer chips and drugs; and target countries importing oil from Venezuela with duties on their US exports.<\/p>\n\n\n\n This is \u201cthe big one\u201d, according to the president. Business leaders and economists are certainly worried about the scale of his trade strategy, which the Tax Foundation already estimates could knock US gross domestic product (GDP) by roughly 0.7% and cost about 500,000 US jobs.<\/p>\n\n\n\n \u201cThe escalating tariffs are a body blow to the global trading system,\u201d said Eswar Prasad, professor of trade policy at Cornell University, and a former official at the International Monetary Fund.<\/p>\n\n\n\n Wherever you stand, a move on this scale would constitute a radical shake-up \u2013 and set the stage for a fundamental overhaul of the US economy<\/a>. And yet, even as he ramped up the rhetoric, Trump has appeared to tread carefully.<\/p>\n\n\n\n \u201cI will immediately begin the overhaul of our trade system to protect American workers and families,\u201d the president declared at his inauguration in January. \u201cInstead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.\u201d<\/p>\n\n\n\n While the threats were immediate, the action was not.<\/p>\n\n\n\n Take Canada<\/a> and Mexico. The administration has adopted a strikingly hardline stance against the US\u2019s largest and nearest trading partners, but its imposition of blanket tariffs has been hit by a dizzying array of shifting deadlines, delays and reversals.<\/p>\n\n\n\n An initial pledge to impose tariffs from \u201cday one\u201d shifted, without explanation, to February. When February rolled around, a last-ditch deal kicked the can to March. When the tariffs were finally imposed, it was a little over 24 hours before carmakers were granted a temporary exemption<\/a>, and 48 hours before all goods covered by an existing trade deal between the US, Mexico and Canada were spared for another month<\/a>.<\/p>\n\n\n\n All the while, Trump and his most senior officials have slowly, but surely, accepted the risks they are raising in pursuit of the rewards they have vowed to obtain.<\/p>\n\n\n\n \u201cTariffs don\u2019t cause inflation,\u201d the president claimed in January<\/a>. OK, prices \u201ccould go up somewhat short term\u201d, he conceded in February<\/a>. \u201cThere\u2019ll be a little disturbance,\u201d he added in March<\/a>, stressing that he was alright with that.<\/p>\n\n\n\n The US treasury secretary, Scott Bessent, acknowledged earlier this month<\/a> that there may well be a \u201cone-time price adjustment\u201d as a result of Trump\u2019s tariffs. \u201cAccess to cheap goods is not the essence of the American dream,\u201d he argued.<\/p>\n\n\n\n While Trump predicts that slapping high US tariffs on foreign goods will prompt an influx of international companies to make products inside the US, rather than out, companies and investors worldwide are already struggling to keep up<\/a> with his administration\u2019s erratic trade policymaking.<\/p>\n\n\n\n So far, since his return to office, Trump has hiked tariffs on Chinese exports to the US and raised tariffs on foreign steel and aluminium to 25%.<\/p>\n\n\n\n The average US tariff rate has already shot up from 2.5% to 8.4% this year, the highest level since 1946, according to the Tax Foundation.<\/p>\n\n\n\n Alex Durante, its senior economist, said the country is \u201cinching towards\u201d the kind of tariffs last seen since the 1930s, when the Smoot-Hawley<\/a> bill, among the most decried pieces of legislation in US history, introduced tariffs on thousands of goods.<\/p>\n\n\n\n \u201cWith each tariff action we\u2019re rapidly approaching a universal tariff that would be damaging to the economy,\u201d said Durante. \u201cBehind the scenes, I think there is probably some concern, even among some of [Trump\u2019s] staff, that they\u2019re rapidly approaching the point of no return.\u201d<\/p>\n\n\n\n