More than 90 years ago, Franklin Delano Roosevelt examined the debris of great depression. He pointed to one of his causes: the tariffs with a high sky built America on the “way to collapse” by inviting retaliation and by suffocation of investment. It was a painful lesson and took decades of permanent global efforts conducted by America to reduce the tariffs and let the trade flourish. From our advantageous benefits in 2025, the risk of protectionism should still be clearly clear. It is tragically, if Donald Trump gets in the way, America risk the repetition of the mistakes of the past.
There is uncertainty about how far Mr. Trump will actually go in his second term. Investors and diplomats have been relieved to delayed universal tariffs for all imports in the first day of the office. But don’t make a mistake: the man who declared the tariff as the most beautiful word in the dictionary is determined to increase protection. He considers tariffs to be a simple tool to achieve multiple goals: it reduces America’s business deficit, rebuilds its production strength, and generates the Gusher revenue government. Every number is wrong.
Dallian Mr. Trump and the tariffs in his first term shows that they have done nothing to narrow the US trade deficit. One of the reasons is that the dollar tends to strengthen when tariffs are used. The effect of first -order tariffs is to reduce US demand for imported goods, leading to less demand for foreign currencies. However, when fewer dollars are sold, the value of the greenback increases, which in turn suppresses global demand for American exports. As a result, even if Americans buy less of the rest of the world, they also sell less.
In order to actually reduce its business deficit, America would have to undergo basic economic changes, while its economical rate increases or decreases investment. It is not clear that no change is desirable: especially a high investment is necessary if America is to hold its own in new technologies, including artificial intelligence. The monomiacal focus on business balance has no effect on the actual strengths of the economy. Just look at Germany and China today, both run giant trade surpluses and both tighten in a faint growth.
The record of recent tariffs also proves that they do not magically create jobs in US factories. Since Mr. Trump’s first tariffs came into force, she has decreased as a share of American employment. Companies in industrial sectors directly protected tariffs during the first administration of Mr. Trump – regardless of steel and aluminum – actually increased their income. However, this profit came to the expense of thousands of downstream companies that suffered from higher entry costs. In other words, America has protected parts of its economy that faced the global market by imposing a burden in their most conventional industries. This is barely a recipe for production renaissance.
At the most amazing moments of Mr. Trump, he spoke about the complete replacement of the tariff income. It is a confused vision: Eliminate taxes on hardworking Americans and forcing foreigners to place government accounts instead. External income service – brilliant piece of marketing Trumpian – would be displaced by an internal income service.
However, Mr. Trump’s first period shows that the actual cost of tariffs is largely carried by US consumers through higher import prices. In addition, it is a banal reality that tariffs can hardly move fiscal needle. Although the import level should remain constant, 10% of the universal tariff would fund a little more than the twentieth federal budget. In fact, imports would not actually remain constant, but rather would decrease because higher tariffs increased the price of imports. Even according to Mr. Trump’s wrong logic, tariffs cannot create a lot of jobs and also increase a large amount of revenue for the government. This is to calculate their effects twice over.
The most optimistic prerequisite about Mr. Trump’s love for tariffs is that they mainly want to deploy them for negotiating the lever effect. It is true that America, as the largest market in the world, has a lot of weight. But tariffs are equally likely to combine America in nodes. After implementation, it is difficult to insert them and their efficiency is reduced by repeated use. For example, if Mr. Trump doubles tariffs against China because it blocks the sale of Tiktok, a video sharing application, then triples due to its exports of fentanyl precursors and four times to face its influence in the Panama channel?
Mr. Trump and many of his supporters took the leonization of the late 19th century as a golden age for the American economy, a period when tariffs were high and growing was strong. This is a distorted reading of what really happened. The scholars found that tariffs were protected by less production societies and increased living costs and that they were other factors, including the growing population, deepening rule of law and the success of undivided goods that supported American growth. All this may sound technically and academically. Unfortunately, it is Mr. Trump, who manages America and the world back to the dead ends in his manging of history and economy.
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