As the US imposes a 10% tariff on almost all imports, senior Trump administration officials are giving conflicting messages about the move’s intentions and impact. Analysts warn of recession as markets reel from the shockwaves.
Tariff Tensions Escalate as Trump Officials Give Conflicting Messages
The United States‘ 10% across-the-board tariff on almost all imports has sent shockwaves around the world, catching investors and top Republican politicians by surprise. The tariffs, which also impose higher rates on about 60 countries, have sparked intense debate among senior officials within President Donald Trump‘s administration.
Tariffs are taxes imposed on imported goods and services by a country's government.
They can range from a few percent to several hundred percent of the product's value.
The primary purpose of tariffs is to protect domestic industries, generate revenue, and influence trade policies.
According to the World Trade Organization (WTO), tariffs have been used throughout history to regulate international commerce.
In 2018, the average tariff rate across all WTO member countries was around 2.5%.
However, some countries like China impose much higher rates, up to 25% on certain products.
A Clear Message or a Calculated Move?
Commerce Secretary Howard Lutnick struck an aggressive tone during his appearance on CBS News‘ Face the Nation, insisting that the tariffs would ‘stay in place‘ and that the president intended to ‘reset global trade.’ Lutnick’s comments seemed designed to reassure investors and calm nerves, but they only served to fuel confusion among markets.
In contrast, Treasury Secretary Scott Bessent told NBC News‘ Meet the Press that Trump had created ‘maximum leverage for himself,’ and that more than 50 countries were approaching the administration about lowering their non-tariff trade barriers. This message suggested that negotiations with individual countries were very much on the cards.
A Recipe for Recession?
Analysts are increasingly pointing to the chances of a recession, which is normally assessed as being two consecutive quarters of falling GDP. The head of economic research at JP Morgan, Bruce Kasman, has raised the probability of global recession to 60%. Larry Summers, the US treasury secretary during Bill Clinton’s presidency, called the tariffs ‘the biggest self-inflicted wound we’ve put on our economy in history.’
The impact of the tariffs is being felt across the globe. In just two days last week, more than $6tn was wiped off Wall Street‘s market value. Trump told US consumers to ‘hang tough,’ but many are bracing for an era of uncertainty.
A Divided Party
For the first time in recent memory, senior Republican officials have spoken out against their leader’s policies. Mike Pence, Trump’s former vice-president, denounced the tariffs as ‘the largest peacetime tax hike in US history.’ Thom Tillis, a senator from North Carolina, warned of a ‘bloodbath‘ for Republicans if the tariffs force the US into recession.
The Democrats, on the other hand, are detecting opportunity in such unusual challenges to Trump from within his own party. Adam Schiff, a Democratic senator from California, floated a draft campaign strategy for the midterms, which included blaming Trump for any economic downturn.
