Lecture Notes: The Impact of Trade Tariffs by Donald Trump

Key Events and Announcements

• April 2, 2025: Donald Trump announced presidential tariffs on over 90 countries.
  • Claimed the world has been exploiting America economically.
  • Resulted in a global stock market crash, risking a global recession.
• April 7, 2025: Marked as the worst day for global stock markets due to these tariffs.

The Trade War: USA vs. China

• Initial tariffs of 34% imposed by the USA on China.
  • China retaliated with 34% tariffs on the USA.
• Escalated with the USA imposing an additional 50% tariff, and China reciprocating.
• By April 9, tariffs rose to 125% on both sides.

Understanding Tariffs

• Definition: A tariff is a tax on imported goods.
  • Used to boost government revenue and protect local industries.
• Example of Successful Tariff Use: South Korea in the 1980s/90s protected its rice farmers with high tariffs.
• Risks: Tariffs can lead to trade wars and strained international relations.

Economic Impact of Tariffs

• Negatives: Can lead to increased prices for consumers, impacting the economy negatively.
  • Historical example: The Smoot-Hawley Tariff Act of 1930 worsened the Great Depression.
• America’s Dependency: Many products/industries depend on imports, making tariffs detrimental.

Donald Trump's Tariff Strategy

• Imposed without negotiation, leading to retaliatory tariffs from affected countries.
  • Justified by aiming to reduce America’s trade deficit.
  • Used emergency powers, raising democratic concerns.

Historical Context

• American Tariff History: Tariffs have been used sporadically, often leading to economic downturns.
  • Notable periods of high tariffs followed by economic depressions.
  • Post-World War II: Advocacy for free trade and WTO formation.

Current Situation and Speculations

• April 9, 2025: Trump paused tariffs temporarily, except on China, with a fluctuating tariff rate.
• Speculations of stock market manipulation based on timing of tariff announcements and subsequent market reactions.

Conclusion

• The unpredictability of Trump’s tariff policies poses challenges to the global economy.
• The response of other countries and potential for negotiation remains uncertain.

Personal Thoughts

• Open-ended questions about the motivations and future actions of Trump.
• Concerns about the potential for future economic instability or manipulation.