Trumponomics and the World Economy

After assuming the U.S. presidency for a second term, one of Donald Trump’s first major actions was to impose tariffs on imported goods from a wide range of countries. Many commentators observed that such large-scale tariff impositions— and the retaliations they triggered— had not been seen since World War II. A significant number of economists, experts, and politicians criticized Trump’s decision, warning that it endangered global economic prosperity, including that of the United States itself. As a result, many observers view Trumponomics as a contradictory and risky strategy for both the U.S. and the world economy.

- Kishore Kumar Biswas

The Economic theory behind Tariffs and Trade

Economic theory traditionally argues against tariffs, suggesting that they function much like taxes: raising the price of goods, lowering demand, and distorting themarket. Trade theory holds that countries should specialize in producing goods where they have a comparative advantage— meaning they can produce more efficiently and at lower cost compared to others. This specialization allows goods to be traded internationally at the lowest cost, benefitting global consumers with cheaper and more abundant products. Imposing tariffs disrupts this balance, leading to inefficiencies and higher prices globally.

The rationale behind Trumponomics

Reviving U.S. Manufacturing: