President Donald Trump released last time The tariff is very highthe financial market was shocked, consumer confidence collapsed, and his popularity declined.
Only three months later, he bets this time was different.
In a new round of tariffs announced this week, Trump essentially tied the entire world economy to his instinctive belief that import taxes would provide factory jobs and growth in the United States, rather than inflation and slowdowns predicted by many economists.
On Tuesday, he told the cabinet that the president who had not actively deployed tariffs in the past was “stupid”. Once a salesman, Trump added “It’s too time-consuming” Trying to negotiate a trade deal with the rest of the world, so it’s easy to send letters to them, as he did this week, listing tariff rates for his goods.
The letters marked a change in his “Liberation Day” event at the White House on April 2, where he had prices on the backboard, and this choice led to the option A brief market crash The 90-day negotiation period and the baseline 10% tariff will end on Wednesday. Instead, Trump chose to send out form letters with random capital and punctuation and other formatting issues.
“It’s a better way,” Trump said of his letter. “It’s a stronger way. We sent them a letter. You read the letter. I think it’s elaborate. And, most of it is just a small part: You’re going to pay 25%, 35%. We have 60, 70.”
When Trump said these words, he had not sent a letter with tariffs above 40%, which he levied in Laos and Myanmar on Monday. He plans to impose 25% tariffs on Japan and South Korea, and two major trading partners and allies see it as crucial to contain China’s economic impact. So far, leaders of the 14 countries have imposed a bid to negotiate before they hope to charge higher rates on import tax rates over the next three weeks.
“I want to say that I have treated them better for years than they did,” Trump said.
The president told Truth Social on Tuesday night that he would issue letters to “at least seven countries” on Wednesday morning and there were other letters in the afternoon.
Three possible outcomes
His approach contradicts the way in which major trade agreements were reached in detailed meetings over the past half-century, which can sometimes take years to resolve complex differences between countries.
There are three possible outcomes for this kind of political and economic bet, each of which can greatly reshape international affairs and Trump’s legacy.
Trump can prove that most economic experts are wrong and that tariffs can grow as promised. Or, he could withdraw tariffs again before starting on August 1, when he started repeating the “Trump always chicken out” phenomenon (also known as tacos). Or, he could damage the economy in a boomerang way to fight the communities that helped him return to the White House last year, and the country that was hurt by tariffs placed at a financial disadvantage.
Senator Ron Wyden, D-ore. Trump’s letter “extends his tariff purgatory for a month” and essentially, the U.S. economy, as CEO, foreign leaders and consumers, is unclear on Trump’s actual strategy for foreign trade.
“Trump pioneered taco negotiation strategies to make him less and less threatened and reduces the willingness of our trading partners to even meet us,” Wyden said. “There is no indication that he is closer to a lasting trade deal that can actually help American workers and businesses.”
Stock and bond markets have been relatively calm so far, with the S&P 500 basically flat after Monday’s decline. Trump cut legislation victory with his multi-dollar tax cuts. And, he confidently levies the levels that had previously shocked global markets, because inflation has eased so far, rather than accelerating like many economists and Democratic competitors.
“By floating tariffs up to 40% to 100%, the government has normalized 25% tariff hikes – but this remains one of the most aggressive and destructive tariff moves in modern history,” said Wendong Zhang, an economist at Cornell University. “This gradually unveiled attitude is paradoxically normalizing what would have been considered a huge tariff hike.”
Others simply see Trump as the source of uninterrupted chaos, and the letters and their random tariff rates suggest there is no real policy process within his administration.
“In fact, this policy is everywhere, they run on the pants’ ground, there’s no real strategy,” said Desmond Lachman, a senior fellow at the American College of Enterprise.
Questions about how much tariffs will be generated
As Trump’s 90-day tariff negotiation period ended, he had sent letters to 14 countries as of Monday, ranging from 25% to 40%. He said Tuesday he would sign an order to impose 50% tariffs on copper, adding that at some point drugs could face up to 200% tariffs. All of this exceeds his existing 50% tariff on steel and aluminum, 25% tariff on cars and his separate import tax on Canada, Mexico and China.
“It’s obvious that now the market is somewhat skeptical of the market Trump will go through, or they think it will be a compromise,” said Ben, director of global economic research at Oxford Economics Consulting. “This may be a key element.”
May said tariffs may reduce growth in U.S. household income, but will not cause these incomes to shrink completely.
Trump said his tariffs would remove the U.S. trade imbalance, although it is unclear why he targets countries like Tunisia, which trade relatively little with the U.S. Government officials say trillions of dollars in tariff revenue over the next decade will help offset the continued and expansion of the 2017 tax cuts signed into law on Friday, thus offsetting loss of revenue.
The federal government has collected $98.2 billion in tariff revenue so far this year, more than double the amount collected last year, the policy center said.
At a cabinet meeting on Tuesday, Treasury Secretary Scott Bessent said tariff revenue could “more than $300 billion by the end of the year”. “We don’t agree” that the Congressional Budget Office estimates that tariffs will bring in $2.8 trillion over 10 years, “we think that’s probably low.”
Governments in Japan, South Korea, Malaysia, Myanmar, Thailand, Cambodia and South Africa all said they hope to further talks with Trump about tariffs, although it is unclear how it is “complex” to hold all of these meetings as Trump calls it.
Instead, Trump posted on social media on Tuesday that starting from August 1, the scheduled fee will be charged.
“By this date, there will be no change, and there will be no change,” Trump said in the Society of Truth. “The extension will not be approved.”
