‘An unplannable environment’

On April 2, global financial markets plummeted, following U.S. President Donald Trump’s announcement of enormous tariffs on goods coming into America. Then, on April 9, Trump paused most new tariffs for 90 days. But he left in place a universal tariff of 10 percent on all imports, maintained new tariffs on steel and aluminum, and continues to escalate a trade war with China: Import duties on Chinese goods are now 145 percent; China, in return, has raised its levies on U.S. goods to 125 percent. It’s all rattled even members of the president’s own party in Congress. The Republican senator Thom Tillis asked the administration’s trade chief, Jamieson Greer, “Whose throat do I get to choke if this proves to be wrong?” 

None of which is to say the tariffs were unexpected. Trump has been talking up tariffs since the 1980s. He imposed tariffs on China in his first term. And he’s not the only American politician who’s blamed the loss of U.S. manufacturing jobs on free trade: Many Democrats, including Trump’s predecessor, Joe Biden, agree on that point. Biden not only kept Trump’s tariffs in place; he even imposed new tariffs on some goods.   

So how radical a break is Trump’s trade policy? 

Martin Wolf is the chief economics commentator for the Financial Times and the author of the 2023 book The Crisis of Democratic Capitalism. Wolf says, very: The new U.S. tariff regime is the biggest reversal in global trade policy since the 1930s. While support for the idea of tariffs had been growing for years, Trump’s nevertheless completely changed the course of American trade policy—and keeps changing it. It’s accordingly almost impossible to predict the consequences—though that itself might be the biggest consequence of all: massively heightened uncertainty.

Trump might keep the China tariffs in place; he might strike a deal with Beijing; or he might negotiate new trade agreements with dozens of countries. Nobody knows. And in that environment, Wolf says, it’s impossible for anyone running a business to make long-term planning decisions—which will likely have major effects on investment. So now, even if Trump were to end the tariffs, he couldn’t stop the spread of radical uncertainty that’s consuming not just America but the whole global economy …

Gustav Jönsson: You’ve said that Trump’s tariffs from his first term were part of a new era of global trade. How do you see the origins of that new era?