How nations can counter Trump’s trade trickery

Much has been written about US President Donald Trump's disastrous “reciprocal” tariffs, which, despite having remained in effect for less than 24 hours, roiled the stock market, drove up Treasury yields, and caused the dollar to depreciate. In fact, the tariffs that have so badly undermined markets’ faith in the US were never reciprocal at all: they were entirely unilateral actions betraying a fundamental misunderstanding of economics.

- Koichi Hamada

US businesses and consumers will face higher prices. Mr Trump himself was forced to concede this in a recent cabinet meeting, though he was dismissive of the impact: children might get “two dolls instead of 30” for Christmas, and the toys might “cost a couple of bucks more” than usual. Still, it was a startling admission, given that he was elected partly on the promise that he would lower prices.

Mr Trump's attacks on the independence of the US Federal Reserve — which he has long held should maintain lower interest rates — make it less likely that this policy-induced inflationary pressure will be reined in. Compounding the risks are Mr Trump's threats to reinstate “reciprocal” tariffs for any country that does not strike a new trade deal with his administration during the 90-day “pause” he announced on April 9. And some tariffs — including a 10% “baseline” tariff on US imports and a 25% sector-specific rate — have remained in place all along.