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The Insights of Trump’s Tariffs?

What grand vision is Trump trying to accomplish through the Liberation Day Policy?

Photo: ©Waingro | Dreamstime.com

By Akerele Christabel

April 7, 2025
3:54 pm
Los Angeles, CA

“I, Donald J Trump, President of the United States of America, find that underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits, constitute an unusual and extraordinary threat to the national security and economy of the United States.” These words marked came as the calm before a global storm that mercilessly tossed the boats of nations and pulled worldwide financial markets into a whirlpool of chaos. On Wednesday, 2nd April, 2025, the president of the United States of America, Donald Trump announced the imposition of sweeping tariffs of at least 10% on foreign goods. Several world leaders

These words marked came as the calm before a global storm that mercilessly tossed the boats of nations and pulled worldwide financial markets into a whirlpool of chaos. On Wednesday, 2nd April, 2025, the president of the United States of America, Donald Trump announced the imposition of sweeping tariffs of at least 10% on foreign goods.

Several world leaders have appeared on media channels to make their stances on the issue known. While some countries, like China, railed against what was coined “typical bullying”, others, like Switzerland, took a more measured, diplomatic approach. At the same time, financial experts are scratching their heads over the rationale behind what seems to be an economic suicide bombing, as the US looks set to be the eye of an inflation storm. The big question on the lips of everyone is, “What is Trump’s plan?”

Instead of pursuing wild speculations over the president’s motive for igniting worldwide chaos, Trump’s Liberation Day speech provides crucial insights that may well be a window into the mind of the world’s most powerful man.

For one, Trump sees the incessant trade deficits suffered by the US as a threat to the country’s economy. He says in his speech that the United States’ manufacturing base has been hollowed out inhibiting its ability to increase domestic manufacturing capacity, restricting important supply chains, and rendering the country defense-industrial.

President Trump blames these effects on the United States’ bilateral trade relationship with other countries, a relationship Trump says are characterized by “a lack of reciprocity”. This lack of reciprocity is evinced in the fact that the share of consumption to Gross Domestic Product (GDP) in the United States is about 68 percent, but it is much lower in others like Ireland (27 percent), Singapore (31 percent), China (39 percent), South Korea (49 percent), and Germany (50 percent).

He believes that this lack of reciprocity hinges on three erroneous assumptions upon which the post-war international economy was based;

1. That if the United States led the world in liberalizing tariff and non-tariff barriers the rest of the world would follow;
2. That such liberalization would ultimately result in more economic convergence and increased domestic consumption among U.S. trading partners converging towards the share in the United States;
3. And third, that as a result, the United States would not accrue large and persistent goods trade deficits.

Furthermore, he further accuses foreign nations of suppressing domestic wages and and consumption, which will, in turn, reduce demand for US exports and cause an artificial increase in competitiveness of foreign goods in global markets. Trump says the United States had met with a brick wall in an attempt to address those imbalances. According to him, trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers.

Trump said the persistent decline in the country’s manufacturing output has resulted in a decline in its manufacturing capacity. At the same time, the United States’ stockpiles of military goods are deemed too low to be of adequate quantity as it concerns the nation’s stretched defense interests. This also depends on its manufacturing capacity.

Another reason the President puts forth is how increased reliance on foreign producers for goods makes the US supply chains vulnerable to geopolitical disturbances. During the COVID-19 pandemic, Americans struggled to access essential products, further exposing its economic vulnerability.

For Donald Trump, allowing the current situation to continue was not sustainable in the current economic and geopolitical environment due to how they negatively affect the country’s domestic production. For all his belligerent nature, Trump’s approval of Liberation Day Policy was not calculated to throw the world into an economic meltdown. For him, this path to making America great again might as well be tarred with tariffs.