Trump instigates trade war on "Liberation Day": "Could trigger global recession"

Frankfurter Rundschau Trump instigates trade war on "Liberation Day": "Could trigger global recession" Simon Schröder • 6 hours • 3 minutes read Trump's tariff hammer As expected, Donald Trump announced further extensive tariffs on "Liberation Day." What does this mean for the global economy? Washington, D.C. – Donald Trump is a big fan of tariffs. On "Liberation Day," the US President has upped the ante. There will be a basic import tariff of ten percent on all goods. For countries that have a particularly high trade deficit with the US, it will be even higher. A trade war is now inevitable. But even during his first term in office, the Republican used tariffs as a means of pressure. According to him, the word "tariff" is "the most beautiful word in the dictionary." It's therefore not surprising that Trump sees import tariffs as a universal weapon when it comes to advancing America in line with his motto "Make America Great Again" and implementing his campaign promises. Donald Trump announces new tariffs on Liberation Day: Trade war with the world? Because Trump uses tariffs as both an economic and political tool of pressure. Stopping illegal immigration at the US-Mexico border was Trump's number one priority during the election campaign. If Mexico didn't tighten controls on its border with the US, Trump threatened to use tariffs. Mexico took action, and illegal immigration plummeted. US tariffs were imposed on its southern neighbor anyway. Then it moved on to Canada and the EU. Donald Trump wants to engage in a trade war with other countries through import tariffs. But what exactly is a trade war? "A trade war is an economic dispute between two countries," as the financial website Investopia defines it. Such a "war" often occurs when a country, such as the United States, feels disadvantaged in international trade. Tariffs are then often used to try to restore the previously lacking fairness. These trade wars are often a side effect of protectionist policies, as Investopia further explains. Tariffs in a Trade War: How Trump Could Harm His Own Economy Tariffs are the means to an end in such a trade war. The levied import duties are paid by companies that want to import products into their own country. Countries, on the other hand, do not have to pay tariffs. But tariffs can also become a burden on their own economies. Exporting companies often raise their own prices to compensate for the tariffs. The higher prices are then passed on primarily to their own consumers, i.e., US citizens, and can encourage inflation. Experts agree that people in the United States will be the ones who feel the additional tariffs, as the New York Times writes. The real purpose of such tariffs is to strengthen one's own location. If foreign companies produce in the US, tariffs are naturally not payable, as the products don't have to be imported. The goods are already in the country. Donald Trump on his way to his Liberation Day speech in the White House Rose Garden. The "reciprocal tariffs" announced by Donald Trump are intended to mirror the import tariffs other countries impose on US products. Trump is clear that other countries are exploiting America through their tariff policies. Therefore, reciprocal tariffs should now be imposed. Whether this makes sense, however, is highly controversial. The International Chamber of Commerce (ICC), for example, warns the Trump administration against instigating an international trade war. If other countries respond with retaliatory tariffs, the trade war could escalate further. The ICC states: "Widespread retaliation risks disrupting trade, potentially triggering a global recession, and we could see a decline in trade of historic proportions—with serious economic consequences for businesses and families around the world," explains ICC Secretary General John Denton. (sischr)