For weeks, Donald Trump and his aides sought to brand Wednesday as “liberation day” in America. Many in the US could be forgiven for wondering what exactly they’ve just been liberated from.
After much hype, the president unveiled his plan for a new era in global trade: a blanket 10% tariff on goods imported into the US from Saturday, and higher “reciprocal” tariffs (of up to 49%) on countries taxing US exports from next Wednesday.
“April 2nd 2025 will be forever remembered as the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to make America wealthy again,” according to Trump.
Historians will be the judge of that. But before anyone writes this chapter, millions of Americans need to navigate the present.
Trump was re-elected last November after years of heightened inflation, and upward pressure on the cost of living. On the campaign trail he pledged, repeatedly and unambiguously, to rapidly liberate the nation from higher prices.
But tariffs, his administration has conceded, risk doing the opposite. The treasury secretary recently dismissed cheap goods as “not the essence of the American dream” after acknowledging that costs may rise as a result of Trump’s aggressive trade strategy: music to the ears of anyone seeking liberation from lower prices.
Anyone sat in the White House rose garden might have been reassured. “Prices are way down,” the president claimed, since his return to office.
Anyone who has visited a grocery store in that time might feel differently. Most prices have, in fact, not fallen since January; inflation is still rising well above the Federal Reserve’s target rate of 2% per year.
“Now it’s our turn to prosper,” he proclaimed. But many US firms are bracing for problematic, not prosperous, effects of this action: higher costs they warn will be passed onto their customers.
“What we have heard from business of all sizes, across all industries, from around the country is that these broad tariffs are a tax increase that will raise prices for American consumers and hurt the economy,” said Neil Bradley, chief policy officer at the US Chamber of Commerce, the corporate lobby group.
Trump likes to present the world as black and white. The US is either winning or losing. A policy, deal or plan is the best or the worst. A person, country or company is supporting or screwing you.
There is rarely space for nuance, time for complexity, or tolerance for inconvenient facts. The simplicity of this narrative is its power.
By Trump’s telling, the US is about to raise trillions of dollars for the federal government by taxing the world, not its citizens: a typically black and white choice.
But reality is often more complex than rhetoric. There are myriad shades of gray.
Import tariffs are not paid by other countries. They are paid by importers – in this case, US firms and consumers – buying goods from overseas. These costs often trickle down through the economy, raising prices at every clink in the chain.
Trump promised lower prices. He is betting his tariffs won’t raise them too high, for too long.
“This is going to be a big moment,” he said on Wednesday. “I think you’re going to remember today.”
He may well be right.
Source: www.theguardian.com