President Donald Trump's proposed tariff plan may be far from the 'Liberation Day' he has promised Americans due to the isolationism that follows it, warned an expert. It comes as the President has even put tariffs on a place that has no humans and only penguins.
Trump's 4 p.m. announcement at the Rose Garden on Wednesday will help understand what the reciprocal tariffs will look like, how many countries will be affected and how high the duties will be. While he had initially planned to levy tariffs on Mexico, Canada, and China, over the weekend, the president announced that “all countries” can expect to see tariffs being imposed. Rand Paul predicts Trump's tariffs will lead to 'political decimation' and says Republicans will lose both the House and Senate.
But experts say the sweeping measures will lead to slower economic growth and higher prices as consumer confidence and stock markets continue to plummet. Meanwhile, Putin's 'real feelings' towards Trump are exposed in a shockingly 'disrespectful' video.
'Allies and rivals will work with each other'
No matter how hard the Trump administration tries to push forth the narrative that the "little disturbance" in the economy will ultimately yield a growing number of jobs and trillions in revenue, the timeline for that seems pretty far away, said Scott Laing, an assistant professor of economics at the University at Buffalo School of Management.
"What does the timeline for that look like? It is very difficult to see the upside," Laing told Mirror US.
Laing warned that the United States' steady run towards antagonizing rivals and allies trade wise will lead to countries trading among themselves.
"Former allies and rivals will work with each other instead of working with the uncertainty of tariffs. Trading partners might start to ignore or work less with the US," he said.
Recently, South Korea, China, and Japan came together in five years to brace for Trump's tariffs and "closely cooperate for a comprehensive and high-level" talk on a trilateral free trade agreement to promote "regional and global trade."
These three are major US trading partners and came together despite their geopolitical disputes. The 25% tariff levied on cars and car parts by Trump will hurt Asian automakers who are some of the largest exporters to the US, according to S&P.
"Since Trump’s election, the EU struck a deal with MERCOSUR, a South American trade bloc, concluded an agreement with Mexico, advanced negotiations with India, and relaunched negotiations with Malaysia. The UK has joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and restarted talks with India. None of these forays would replace trade with the US. But they do indicate a desire by key US trading partners to diversify trade flows and hedge against unpredictability.." Max Yoeli, a senior research fellow at Chatham House, wrote.
"We don't know the extent to which countries will do to respond," Laing said.
The view from Europe
The European Union has already issued a chilling warning to Trump's tariff plans.
“Europe has not started this confrontation,” Ursula von der Leyen, the head of the European Union’s executive, said in a speech.
"We do not necessarily want to retaliate, but if it is necessary, we have a strong plan to retaliate, and we will use it," she added. “We will approach these negotiations from a position of strength. Europe holds a lot of cards, from trade to technology to the size of our market,” she continued. “But this strength is also built on our readiness to take firm countermeasures if necessary. All instruments are on the table," she said.
While Von der Leyen did not elaborate on how the EU might respond, the bloc had responded to Trump's steel and aluminum tariffs in March by announcing countertariffs worth $28 billion on American goods, namely boats, bourbon, motorbikes, and more.
While the Trump administration is focused on bringing a lot of outsourced or offshored industries back to the nation, the United States may not be situated to produce goods efficiently at a lower cost compared to other nations that are a part of the free trade market. This tendency may also tend to hurt Washington's competitiveness in the global market as well as harm total surplus in the global markets.
This is also undermining American economic power and security. While the US is the world's most desirable consumer market, it is not irreplaceable.
"With trade wars, the US is losing its soft influence on trade networks," Laing warned, adding that the current tariffs that counter the ideology of free trade are defying decades of proven data on what makes an economy function and thrive.
Losing market influence could be extremely detrimental to the post-war economic progress that the US has made, he warns.
Reciprocal tariffs, too, will ultimately hurt the consumer-driven economy, he said, as companies will "not eat the cost" and instead pass it down to consumers to keep businesses profitable.
As domestic goods become more expensive and people, especially low-income families and elderly folks on fixed income, start feeling the pinch, the economy is about a quarter of contracting GDP away from facing stagflation, or worse, recession.
"How long will the average voter tolerate seeing the retirement account deteriorate in values? How do you justify it to the consumers? Laing said.
