The big day has arrived. Donald Trump has imposed exorbitant tariffs on the rest of the world.
The basic rate will be 10% for all products entering the United States, but 20% for the European Union, 24% for Japan, 26% for India, 34% for China (i.e. 54% with the existing 20%) and 46% for Vietnam.
These tariffs are half of the tariffs, currency manipulation and customs barriers applied by each country to American products (without specifying the method of calculation).
60 countries are targeted with customs duties according to the calculation mentioned.
The administration aims to raise $700 billion from these taxes, or 2.4% of the US GDP. This is a level not seen since 1820/1830. America had nothing comparable, lagging far behind Great Britain and Europe at the time.

Tariffs will increase import prices because, in the short term, American supply will not be able to adjust upwards. These higher prices will have an impact on demand, which will be weaker, thus reducing the American external deficit.
Except that many products are essential to the functioning of the US economy. Computers, cell phones and a large number of products will, no matter what, have to be paid more because they will be essential to the functioning of the US economy. The production of these goods cannot be quickly localized in the USA under the same conditions. The impact will be inflationary.

In the short and medium term, imports will pick up again, and the deficit will return. If the products were manufactured elsewhere, it’s because the manufacturing conditions there were better. And what kind of labor will this new production rely on? The unemployment rate is 4.1%, and expansion won’t be able to rely on cheap foreign labor, since it’s being expelled. The impact will be inflationary.

The targeted countries will retaliate. China, Europe, and others will react. Tariffs or barriers of all kinds will be imposed, weighing on American exports. This will not reduce the US external deficit.

The measures taken are a negative shock to the global economy and world trade. Everyone will lose. Raising prices 10, 20, or 30 percent higher and thinking this will lead to better conditions is a delusion. Americans in Wisconsin, Ohio, or Montana will suffer because high prices or shortages will make their lives more difficult. World trade will be affected, and China, Europe, India, and others will also suffer.
In the old world, production was located where it was most efficient and therefore best for collective well-being. This allocation will now be guided by customs tariffs, and so much the worse for collective well-being.