Trump's Tariffs Obscure a Much Bigger Challenge for the World

The global economy is utterly dependent on the U.S. Growth elsewhere does not look promising.

- Daniel Moss

For all the outrage at U.S. President Donald Trump's swift and broad imposition of tariffs, there's a bigger challenge for the world. The U.S. economy is on a roll, doing much better than anyone anticipated just a few years ago and surpassing partners and competitors alike. Behind the tut-tutting about the negative consequences of levies and the dangers of protectionism is an underlying fear that long-held assumptions that China, and possibly India, will eclipse the U.S. are wide of the mark.

This outperformance precedes Mr. Trump's return and is unlikely to be undone, at least in the immediate term, by the impact of new duties. His administration this week ordered tariffs on imported steel and aluminum, and threatened reciprocal charges on countries that tax imports from the U.S. The step roiled markets from Thailand to South Africa. India intervened to prop up the rupee after the currency fell to a record low. The People's Bank of China is resigned to managing the yuan's retreat rather than trying to prevent its weakening. The greenback's upward march the past few years shows little sign of reversing despite the Trump-induced upheaval. Tariffs are widely considered to be inflationary and likely to slow the pace of interest-rate cuts, assuming they still happen at all, in the next few months.