Opinion: Trump’s reciprocal tariffs will be worse than you think

By Mark Mullins

Most market and political analysts are negative on the next round of United States tariffs, coming April 2. But to my mind they are grossly underestimating their size and impact.

In one bearish example, Goldman Sachs sees the average U.S. tariff rate rising 10 percentage points this year, up from a four-point rise forecast only a month ago. Stock markets have responded to such views and to volatile White House tariff announcements with a seven per cent drop in prices from their recent peak, but so far this has merely reversed the post-November election euphoria.

The question is whether these predictions and market responses are negative enough. My answer is: emphatically not. Much more damage is likely on the way. If we take the Trump administration at its word, tariffs will be substantial and permanent. Contrary to received opinion, they are not a temporary bargaining tool meant to eventually lower tariffs in the U.S. and abroad.

Vice-President JD Vance describes them as a “tariff wall” to bring jobs back to America. Commerce Secretary Howard Lutnick harkens back to the late 19th century when “America was built on tariffs.” The average U.S. tariff then was 25 per cent versus 1.5 per cent today. President Donald Trump refers to April 2 as “Liberation Day” and has long seen tariffs as a way to restructure trade, raise tax revenues, reduce the trade deficit and increase investment at home. The approach may well be economically unsound, but the only way to make it truly effective is if tariffs bite and last for years.

There is a guidebook for just how high the tariffs could rise: Trump’s Reciprocal Trade and Tariffs Memorandum, released in mid-February. It gives five reasons for using tariffs to fix “unfair