The News
President Donald Trump’s baseline 10% tariffs on all US imports went into effect Sunday, as the country’s biggest trading partners braced for further shocks later this week.
So far, the reaction to the duties has been mixed: China retaliated with 34% tariffs on all US exports, while others like Israel prepared to negotiate. Some, including Indonesia and Taiwan, said they had no plan to push back. According to Trump’s National Economic Council chief, more than 50 countries have already contacted the White House asking for talks.
The range of responses, market volatility, and ballooning trade war underscore the unprecedented nature of Trump’s attack on the global trade system, with the consequences for Washington — planned and unplanned — still unclear.
SIGNALS
The motivations and risks of retaliation
Donald Trump’s tariffs may not end global trade, “but it is certainly a retreat from unfettered free trade, which is the way the world seemed to be going,” one economist told The New York Times. While some free trade proponents have argued against retaliation, “that has never worked politically,” the Nobel Prize-winning economist Paul Krugman told Ezra Klein. Rather, leaders like Canada’s Mark Carney should respond, Krugman said: “You have to do something that appeals to Canadian national pride, which very much exists.” And past periods of protectionism have shown that trade barriers can take far longer to come down than to erect, the Financial Times wrote. When duties fail to extract quick concessions, “tariffs can stay on the books for decades.”
‘Pressure and pride’ dash hope of US-China rapprochement
China’s swift retaliatory measure — 34% tariffs on all US imports — marked a departure from Beijing’s long-time policy of restraint in the face of Washington’s past protectionist moves. And with virtually no open lines of communication between the two, a “cycle of tit-for-tat retaliation” is likely inevitable, at least in the near term, The Wall Street Journal wrote. Chinese leader Xi Jinping and Trump “are locked in a paradox of pressure and pride,” one analyst said, with neither willing to appear weak amid a new great-power competition to define the world economic order. Some analysts believe Trump is trying to crush China’s global influence, but his aggressive trade moves — and the backlash they inspire among US allies and adversaries alike — could ultimately boost Beijing, analysts said.
Rising public discontent could pile pressure on Trump
The tariffs took effect the same weekend tens of thousands of Americans protested against the administration in the biggest national show of opposition since Donald Trump returned to the White House: Rallies were held across 1,200 locations Saturday, the demonstration’s organizers said, with protesters voicing broad frustration with Trump’s agenda and the economic turmoil that has marked the past month. Polls have shown rising discontent with Trump’s trade policies: In one recent survey, 54% percent of voters disapproved of the tariff strategy. A mix of pressure from “households, business, markets and Republicans” could force Trump to backtrack sooner rather than later, the Financial Times’ Tej Parikh argued.