Professor Jeremy Siegel of the Wharton School considers President Trump’s recent tariff policy a major mistake, potentially worse than the Smoot-Hawley Act. These tariffs, including a 10% baseline tariff and significantly higher rates on specific countries, have already triggered market downturns and retaliatory measures from China. Siegel predicts a heightened recession probability exceeding 50% if tariffs persist, though he anticipates a slowdown even if they are removed. He further forecasts lower interest rates and higher inflation as a consequence.
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President Trump’s new tariffs, set to take effect in April, have been widely criticized for their seemingly arbitrary calculations. Instead of considering both tariff and non-tariff barriers as claimed, the administration’s formula essentially divided each country’s trade deficit by its imports from the U.S. This resulted in significantly increased effective tariff rates, potentially rivaling the Smoot-Hawley Act in scale, prompting sharp market declines and international condemnation. Retaliatory measures from countries such as Mexico, Canada, China, and the European Union are expected, raising concerns about a global trade war. The Commerce Secretary has indicated that exemptions are unlikely.
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President Trump announced sweeping new tariffs affecting numerous countries globally, marking a significant escalation of his trade war and a potential reshaping of the postwar trading system. These tariffs range from 10% to 50%, impacting various sectors, with Asian nations facing particularly high rates while Latin American countries receive comparatively lower tariffs. While Canada avoided the baseline 10% tariff, existing tariffs remain in place, posing a severe threat to its auto industry. This action has sparked significant opposition, even within Trump’s own party, and is widely considered the largest sudden tax increase in American history.
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John Q. Hosedrinker