| The tariffs are the most full-throated expression yet of Trump’s “America First” protectionism, and potentially marks a new era of global trade war. The administration has promised a transition period, acknowledging the likelihood of economic pain for US consumers while insisting that things will all work out in the end. However, it is unclear that US politicians are willing to weather this storm as the first signs of a political backlash in the president’s own party emerge. Does Trump’s rationale make any sense? Trump has cited various reasons over the years for his fixation on tariffs, but this latest iteration is largely driven by “good old-fashioned nostalgia”, says Scott – specifically, for the 1950s, when the US dominated global manufacturing. Trump’s vision is that these tariffs will spark a revival of that manufacturing boom. However, there are several major flaws in his reasoning. Firstly, that era was a unique moment in American history that cannot be recreated. “All of its competitors, namely Europe and Japan, had been completely flattened during world war two, whereas the US hadn’t, so it found itself in an extraordinary position where there was massive demand for its manufacturers,” Scott explains. Secondly, shifting production to the US would be prohibitively expensive for many companies. Will they be willing to take that risk when there is no guarantee tariffs will remain in place for months, let alone years? While some firms have begun exploring US manufacturing expansion, many may simply wait out the uncertainty and see what happens once the dust settles. Another challenge is the majority of manufacturing job losses over the past 40 to 50 years, driven by productivity growth and technological advances. “You simply do not need as many people now to make stuff as you used to,” Scott says. A rough calculation by the Centre for European Economic Policy and Research found that even if Trump were somehow able to eliminate the US trade deficit solely by boosting manufacturing (an unlikely scenario), it would only increase manufacturing employment by 1%. “You’re not going to see mass manufacturing employment as it existed in the 1950s, in the same way that we’re never going to see mass agricultural employment like we had 200 years ago,” Scott adds. What about everyone else? The reciprocal tariffs will not take effect until 9 April, but when they do, there is a strong likelihood that retaliatory measures will drive up prices across a wide range of goods. The UK’s business secretary has launched a formal process to retaliate against Donald Trump’s tariffs if Britain does not secure a trade deal with the US. Europe and the UK will likely also face indirect pain. A surplus of low-cost goods, displaced by US tariffs, may flood European and British markets, making it harder for local companies to compete. Some of the world’s poorest countries have been hit with some of the steepest tariff rates. Lesotho, Cambodia, Laos, Madagascar, Vietnam and Myanmar have been slapped with rates between 45% and 50%, which could inflict severe economic damage during a time when the US has already withdrawn aid to many countries. The fallout in the US No one knows exactly how this will play out long term, in part due to Trump’s mercurial nature, but the market reaction so far has been overwhelmingly negative. The Nasdaq fell 6%, while the S&P 500 and the Dow dropped 4.8% and 3.9% respectively. The US dollar weakened against other major currencies, hitting a six month low, while oil prices tumbled. However, Paul Diggle, chief economist at Aberdeen, told the Guardian that market turmoil may not be enough to sway the administration. “So far, the administration appears far more tolerant of market weakness than in Trump’s first term,” he said. The vice-president, JD Vance, said the stock market reaction “could be worse” and faulted critics as taking a short-termist view. The Wall Street Journal found that if the tariffs remain in place, inflation could rise from 2.5% in February to 4.4% by year’s end, while unemployment could climb from 4.1% to 5.5%. The risk of recession is also increasing, all of which could harm the very people Trump claims to be fighting for. “The US is already suffering from a loss of consumer and business confidence, and this will only exacerbate that,” Scott says. “Businesses hate uncertainty, and, frankly, consumers don’t like it either – they’ll just hunker down and stop spending.” Beyond the bravado and the clear attempt to wield economic leverage, the broader critique of globalisation is not without merit, Scott says. “Blue-collar workers have faced wage stagnation and rising inequality for decades. But the tragedy is these policies, supposedly intended to address that, are unlikely to succeed – and the very people they aim to help will be hardest hit by inflation. That could deepen the general disillusionment with politics, which is deeply concerning.” | 