The world responds to an angry man's punitive tax
Andreas Cervenka
Reporter and economic commentator
This is a commentary text. Analysis and positions are those of the writer.
Updated 11.29 | Published 10.15
Rarely has one person cost so many people so much money. Donald Trump's new tariffs will act as a tax increase for everyone.
All based on a resentment against the outside world that has been simmering for decades.
The damage risks living on for a long time.
On YouTube there is an interview with Donald Trump from 1980. At the time, he was a 34-year-old heir to a real estate fortune but already had views on how the United States should be run.
He explains that America is “very little of its potential” and that under “the right leadership, the nation can return to what it once was.”
When asked what the United States should be, the young Trump replies: “It should be a country that gets the respect of other countries.”
In another 1980s interview with CNN’s Larry King, he attacks free trade, which Trump says is essentially other countries blowing the United States.
“They laugh at us behind our backs,” Donald Trump thunders.
And so it goes on year after year after year. The image of the United States as a gullible child exploited by bigger, tougher guys in the schoolyard has been cultivated by Donald Trump for at least 45 years. It is an obsession more than an economic analysis.
Since then, everything has changed, but at the same time, nothing has changed. The world economy looks completely different, but Donald Trump’s emotional state remains in the 1980s.
Which brings us to April 2, 2025.
Donald Trump raged against countries that have “plundered” and “raped” the United States for decades.
Now it’s our turn to prosper, he declared.
This coming from a president of the planet’s largest economy that has outpaced others in terms of economic growth in recent years, holds the world’s reserve currency and completely dominates the list of the most valuable large corporations.
The identity of a bully who bullies losers is a bit hard to understand, to put it mildly.
But it’s never too late to change things. Donald Trump’s tariffs have the potential to plunge the United States and the world into a new recession.
The simple drawing board plan is that the tariffs will cause new factories to spring up like mushrooms in the United States. Countries like China, Vietnam and Bangladesh will be hit with extra high tariffs according to the list that Donald Trump presented.
What do you think is being made there? All the things that the American middle class needs, from clothes to toys and electronics. And what will they cost if they are produced with American wages?
How does this relate to Donald Trump's election promise to lower prices?
There does not seem to be any deeper logic behind the different tariff rates. The Financial Times writes that the Trump administration seems to have only started from the US's trade deficit with various countries, as if it were a crime against America to export there.
You can think many things about the conditions of global world trade, but it is difficult to see that the US has not been one of the big winners, in the form of cheap products that in turn have served as rocket fuel for the profits of American companies.
And moving production and tearing up supply chains is easier said than done.
Presidential advisor Peter Navarro has said that the tariffs will bring in $600 billion for the US government and called it a "tax cut".
The Wall Street Journal perhaps summed up this “analysis” best:
George Orwell, call your office. Talk of lower taxes is a gibberish that fools no one.
Instead, the WSJ explains that this is the largest tax increase in US history. It is consumers who will pay for the tariffs in the form of higher prices.
In Europe too, we can expect that many products may become more expensive.
Some who are also not buying the rhetoric from the White House are the players in the financial market. The stock markets look set to fall sharply on the news.
Even before Trump’s speech, which most analysts describe as worse than expected, American consumers and companies had become more pessimistic and forecasts for US growth were downgraded.
What happens now? Perhaps the biggest weakness in Donald Trump’s analysis is that the US is acting from a position of strength and in a vacuum where it is only possible to introduce things without other countries reacting.
But other nations, including economic powerhouses such as the EU, Japan and China, are already preparing their countermeasures. And the US is actually very vulnerable to trade wars, as it is very dependent on imports to keep its economy running.
It is akin to self-harm.
The optimist says that Trump's tariffs are the first round of a bargaining game. Let's hope they are right.
It remains to be seen whether more reasonable agreements can be made.
But even if they succeed, the damage will be permanent. The risks in the world economy have increased and confidence has decreased.
These are the worst possible conditions for those who, like Donald Trump, claim to want to build wealth.
Donald Trump's 1980s dream, that the US would enjoy more respect around the world, feels more distant than it has in a very long time.
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