Trump claims he is imposing “reciprocal tariffs” and says they are about half of what other countries levy on U.S. goods. In fact, the numbers he is using for his claim that other countries are imposing high tariffs on U.S. goods are bonkers. Economist Paul Krugman points out that the European Union places tariffs of less than 3% on average on U.S. goods, while Trump maintained its tariffs are 39%.
Krugman said he had no idea where that number had come from, but financial journalist James Surowiecki figured out that the White House “just took our trade deficit with [each] country and divided it by the country’s exports to us.” He called it “extraordinary nonsense.” Washington Post economic writer Catherine Rampell posted that she was reluctant to amplify Surowiecki’s theory that the tariff rates were based on such a “dumb calculation,” but then the Office of the U.S. Trade Representative confirmed it.
Certain observers in business had apparently persuaded themselves that Trump didn’t really intend to raise tariffs very much and that his many vows to do so were simply rhetoric, since economists agree that tariffs are a tax on consumers and will raise inflation and slow down growth. Today’s tariffs are higher than expected, and business leaders are alarmed.
JPMorgan tonight said that they “view the full implementation of these policies as a substantial macro economic shock not currently incorporated in our forecasts” and that “these policies, if sustained, would likely push the US and global economy into recession this year.”
Economist Brad Setser of the Council on Foreign Relations agreed. He told David J. Lynch and Jeff Stein of the Washington Post: “In the short run, the effect is probably a recession. It’s going to raise the price of so many goods that can’t be made in the United States…. In the long run, it’s a vision of the U.S. that is very isolated from the world.”
But not from every other country. While Trump imposed tariffs on Australia’s remote Heard and McDonald Islands, which are uninhabited except by wildlife like seals and penguins, it did not put tariffs on Russia. A different financial shift lifted sanctions against senior Russian negotiator Kirill Dmitriev, to permit him to travel to Washington, D.C., today to meet with U.S. special envoy Steve Witkoff for what Alex Marquardt, Jennifer Hansler, and Alayna Treene of CNN refer to as “talks on strengthening relations between the two countries as they seek to end the war in Ukraine.”
Senator Chris Murphy (D-CT) noted tonight that the tariffs make no economic sense because “[t]hey aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.” Murphy suggests they are a way to make private industry dependent on the president the same way he has tried to make law firms and universities dependent on him. Industries and companies “will need to pledge loyalty to Trump in order to get sanctions relief.”
Murphy warns that “[t]he tariffs are DESIGNED to create economic hardship…[s]o that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it’s a win-win: the economy improves and dissent disappears.”
There is also Trump’s apparent fascination with President William McKinley, who held office from 1897 to 1901, at a time when high tariffs concentrated wealth in the hands of industrialists while workers and farmers, as well as their families, faced injury, hunger, and homelessness from dangerous working conditions, low wages and commodity prices, and seasonal factory closings.
Trump has frequently claimed those years were the nation’s wealthiest, and today he helped to explain his focus on that era when he referred to the 1913 Revenue Act, a law that has angered the right wing for decades. That act began the process of replacing the high tariffs of the late nineteenth and early twentieth centuries with an income tax, thus shifting the burden of funding the treasury from ordinary Americans through tariffs to wealthier Americans through the income tax. At least some of Trump’s tariff plans seem tied to his enthusiasm for tax cuts on wealthy individuals and corporations.
But in trying to reestablish the financial patterns of the late nineteenth century—patterns that led to profound economic instability in the U.S., including economic crashes—Trump is undermining the system of global trade that has fostered international cooperation since World War II. CNN global economic analyst Rana Foroohar told CNN’s John Vause: “This is Trump saying…I am going to overturn globalization as we’ve known it.” She added: “I’m hoping it doesn’t push the U.S. and the world into recession.”
Josh Marshall of Talking Points Memo makes the important point that “Presidents have no inherent power over tariffs whatsoever.” The Constitution gives to Congress, not the president, the power to impose tariffs. But the International Emergency Economic Powers Act allows the president to impose tariffs if he declares a national emergency under the National Emergencies Act, which Trump did today, declaring a “national emergency to increase our competitive edge, protect our sovereignty, and strengthen our national and economic security.”
That same law allows Congress to end such a declaration of emergency, but so far, Republicans have declined to do so. Today the Senate rebuked Trump by passing a resolution to block his tariffs on Canadian products, with four Republicans—Susan Collins (ME), Mitch McConnell (KY), Lisa Murkowski (AK), and Rand Paul (KY)—joining Democrats to pass the resolution. House speaker Mike Johnson (R-LA) is unlikely to take the measure up.