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Takeaways
- The U.S. imposed heavy tariffs to a number of trading partners in the world, causing a serious blow to the free trade system that was built over the decades following WWII.
- The "Liberation Day" tariffs, meant to restore U.S. manufacturing to its glory days, hit Asian countries the hardest, led by a cumulative 104% tariff against China.
- Economists warn that if the tariffs are not reduced soon, they will increase inflation and hurt the U.S. economic system.
The “reciprocal tariffs” imposed by President Donald Trump on U.S. trading partner countries went into effect at midnight on Wednesday, increasing import costs from China and other trading partners, including the European Union, Japan and others.
The round includes a punishing tariff of 104% on China, America’s most important trading partner and biggest economic rival. The European Union received a 20% tariff. Taiwan was hit with an additional 32% tariff. Japan was hit with an additional 24% tariff. South Korea and Vietnam were each hit with a 46% tax.
The tariffs follow a 10% tariff on most countries in the world, a 25% tariff on imported cars, and a 25% tariff on goods from Canada and Mexico that aren’t under the USMCA. These tariffs may close the chapter on the post-World War II free trade era, and return the clock to the protectionist policy of the 19th Century.
Economists have warned that the import taxes will likely push up the cost of living, reignite high inflation, and send the U.S. economy into a nosedive. If the import taxes are not retracted soon, it could lead to the loss of millions jobs.
The Trump administration said Tuesday that several countries were negotiating with the U.S. to reduce tariffs. The deadline passed without any agreements being reached.
Trump has said that the tariffs will reverse the loss of manufacturing in the U.S. in the past 30 years, force other countries lower their own trade barriers for U.S. firms, and raise revenue in place of income tax to run the government.
