The Trump administration’s latest tariff announcement is no exception, catching the entire industry flat-footed. It has ignited fierce rebuke from local civil society and international watchdogs. All the administration achieved was to slap a 10% tariff on all countries. A dozen other countries are subject to higher tariffs, set by an undisclosed formula. Industry analysts are interpreting the announcement as an indication of a very concerning trend. They call it exceptional, dangerous incompetence, characterized by a pattern of falsehoods and egregious lies.
As many economists and industry experts have pointed out, the new tariffs are politically motivated and not aimed at true trade reform. This poses serious questions about what such long-term horizons mean for their sustainability and impact on the global economy. According to Fitch Ratings, that effective tariff rate on imports has skyrocketed to nearly 22%. This is an astounding 24-fold increase from the 2024 worldwide introduction rate of only 2.5%. This is the highest level of tariffs since roughly 1910 and has caused many to worry about economic repercussions.
As implemented under this new policy, all countries start by facing the default 10% applied tariff. Some countries will have to pay extra fees determined by a formula that has never been publicly released. This lack of transparency has added fire to the criticism and speculation around what the administration is trying to do.
The European Union shot back with their own retaliatory actions, placing a massive 39% tariff on imports from the U.S. In return, the U.S. government retaliated with a 20% tariff on various European goods and products. This action severely deepens the ongoing trade war between the world’s two largest economies.
Investment manager Ben Hunt is said to have come up with the infamous tariff formula. Notably, it ignited debates on cable television, catching the attention of both political analysts and economists. Former New York economic writer James Surowiecki was an early and vigorous participant in the debate over this formula. That said, it has ignited praise and concern from multiple industries.
Though the formula’s full implications were denied by the U.S. Trade Representative’s office, they did confirm much of the formula. This hypocritical position has created cynicism on both sides, from the public trying to understand this administration’s credibility and logic as to why these tariffs exist.
A number of high profile leaders have already commented on this developing story. Economist Paul Krugman stated, “There’s so much wrong with this approach that it’s hard to know where to start,” reflecting widespread concern about the administration’s decision-making process.
The Guardian newspaper responded with similar sentiments, arguing that the tariffs appear intended to make a statement of strength. They claim the aim is more about enriching particular industries or proponents. To support this assertion, they pointed out that the tariffs were expressly not intended to supplant income tax. Instead, they wanted to show off U.S. military power on the international stage.
“Donald Trump has probably not read much Michel Foucault. But he appears to embody the French philosopher’s claim that ‘politics is the continuation of war by other means’” – The Guardian