Trump’s tariff war: The intended and unintended consequences

Subscribe to enjoy similar stories. This week, the new US president addressed the US Congress in what turned out to be the longest speech in history. Apart from talking about immigration, geopolitical conflicts and making America great again, Donald Trump reiterated his strong stance on tariffs.

He singled out India for its high tariffs on US auto exports to India and threatened reciprocal tariffs. Now is the time to delve into the intended and unintended consequences of Trump's tariffs. In the six weeks since Trump assumed office, he has imposed (and threatened) tariffs on a whole bunch of countries and sectors.

Countries on his radar have included the US’ largest trading partners–China, Mexico, and Canada. Tariffs were paused to bring them to the negotiating table, only to be reapplied a month later. He has also threatened tariffs on the European Union and India.

Products under the tariff-heat include steel, aluminium, automobiles, pharmaceuticals, and electronics. Most recently, reciprocal tariffs have been threatened wherein somehow, ignoring the economics of demand and supply, the US would impose the same tariff on other countries, as is imposed on them by those countries. To be sure, tariffs are not new to the Trump regime.

For instance, while Trump had imposed 25% tariffs on Chinese goods during his first term, Biden increased the tariffs exponentially to 50% on Chinese electronics and 100% on Chinese electric vehicles. But what makes the tariffs under Trump’s regime particularly detrimental to the economy, is their unpredictable and indiscriminate nature. Tariffs announced today could be extended or rolled back tomorrow, depending on whether other agendas are satisfied.