American President Donald Trump’s anticipated return to the White House in 2025 came with a renewed “MAGA” (Make America Great Again) agenda, the first of which caused a worldwide domino effect on the trade sphere. At a major event in the White House Rose Garden on April 2, 2025, Trump’s oration enlightened America on excessively increased tariff rates moving forward, on imports from their major trading partners. The Organisation for Economic Co-operation and Development (OECD) has confirmed the average U.S. tariff rate to jump from 2.5% to the highest ever since 1938, 15.4%. China is faced with an effective tariff rate of 54% on certain goods, while India, the European Union, Japan, and South Korea all contend with tariffs between 20% and 34%. Even allies like Canada and Mexico, part of the USMCA agreement, have not been spared, slapped with 25% tariffs on most goods and 10% on energy products. Trump’s tariff policy stems from observing the U.S. trade deficit. His perspective of the current trade scenario is based on America suffering direct financial losses and not a complete structural macroeconomic metric. According to Trump, the more America imports, the more it bleeds. His solution? Tariffs, blunt, and all-encompassing. Tariffs are Trump's biggest tool to set the policy straight once and for all. It is expected to solve job losses, manufacturing decline, and foreign policy tensions once and for all. But should he believe that economic complexity can bend so easily to political tactics? The OECD has responded with stern warnings. In its revised global forecast, it lowered worldwide growth projections from 3.3% in 2024 to just 2.9% for 2025 and 2026. The U.S. itself is expected to slow from 2.8% to 1.6% in 2025, a sharp decline driven by declining investment and weakening consumer confidence. The OECD is clear: Trump’s tariffs are already disrupting trade, straining supply chains, and disincentivising corporate expansion. Tariffs are a strategic tool for the regulation and implementation of economic shielding, disguised as tax, that consumers are compelled to pay in the form of expensive pricing. This year’s tariffs were like a tidal wave crashing against sectors like Chinese electronics and Vietnamese textiles, to Indian pharmaceuticals and European automobiles. Businesses that depend on imports are now caught in a vicious cycle of absorbing higher input costs or passing them on to customers. For working-class Americans, the demographic Trump caters to, championing inflationary pressure has been the most direct blow as of yet. The new Trump-initiated “reciprocal tariffs” have caused a storm in nations like Cambodia (49%), Bangladesh (37%), Sri Lanka (44%), and Taiwan (32%) based on their trade barriers and utmost economic injustice. These countries have already been considered to be low-income economies that rely heavily on exports to the U.S., toppling them into instability as a whole. Thus, pushing them toward alternative trading blocs like BRICS or further into China’s sphere of influence. Allies of this policy see no wrong in it and have argued that the tariffs are necessary to counter decades of unfair trade, or in Trump's words, “being ripped off,” and that restoring domestic manufacturing is the only way out. Economically, the increased tariff rates have caused a ripple effect across production ecosystems, increasing costs for everything from smartphones to semiconductors. The most alarming consequence of these tariffs is the probability of fracturing the global economy. The OECD warns that de-globalising production could reduce global GDP by up to 5%. Countries are already responding in kind, either with retaliatory tariffs or by strengthening trade agreements that exclude the U.S. Isolating America’s economy is trading risky waters during this troubled time of climate change, technological governance, and public health. These tariffs have alienated key allies in Europe and Asia, and penalised countries like India and Vietnam, which the U.S. was courting as strategic counterweights to China, the administration has unfortunately undercut its own foreign policy goals. It has become clear that economic power is a pillar of geopolitical influence, and weaponising trade risks eroding the very alliances that give the U.S. leverage in global affairs. Protecting America’s economic stature may offer temporary political gains, especially in key industrial swing states. But profound long-term costs will fester sooner or later in the economic, diplomatic, and social landscape. Tariff wars ending on civil terms have rarely shown up in history- declining innovation, loss of wealth, and regulation of painful methods of recovery will only be found at the end of this tunnel. President Trump, for now, should be reviewing his goals to ensure a more resilient and fair vision within this competitive American economy. The answer to successful trade policies and moulding America into a self-reliant nation lies not in walling off trade, but in investing in domestic capabilities: infrastructure, education, innovation, and green industries as the appropriate strategy that combines smart regulation, multilateral agreements, and long-term planning. It is essential for trade to reform, but not be completely wiped out of existence. The global economy is too interconnected, too interdependent, to retreat behind tariff walls. In choosing tariffs as his flagship policy once again since 2018, Trump may be betting on nationalism. But the world, and the economy, may not follow him this time.
08 Apr 2025
Ahana Ghosh
