Trump’s Tariff Policy: Highest Rates in Over a Century
On April 2, 2025, President Donald Trump unveiled a new tariff policy that significantly raises U.S. import duties, pushing them to levels not seen in more than a century. The move is framed within a broader strategy to address trade deficits with various nations, particularly China.
Details of the New Tariff Structure
Under the new guidelines, the baseline tariff on imports is set at 10%. However, additional, steep tariffs targeting specific countries have been introduced, reflecting the trade imbalance the U.S. experiences with its trading partners. Notably, the effective tariff rates are expected to exceed 20%, surpassing figures established by the historical Smoot-Hawley Tariff Act of the 1930s.
Expert Insights
Sarah Bianchi, the chief strategist for international political affairs and public policy at Evercore ISI, commented on the implications of these new tariffs. She stated, “This pushes the overall U.S. weighted average tariff rate to 24%, the highest in over 100 years and likely to reach as high as 27% with the anticipated implementation of sector-specific tariffs.”
Similarly, Michael Feroli, chief U.S. economist at JPMorgan, indicated that the average effective tariff rate has jumped from approximately 10% to just over 23%. He noted that these rates could further increase due to the executive order linking tariffs to potential retaliatory actions from U.S. trading partners.
Historical Context and Future Considerations
Fitch Ratings echoed similar sentiments, predicting that the overall tariff rate could hit its highest levels since 1909. During his remarks in the Rose Garden, Trump referenced the Smoot-Hawley Act, arguing that the issue wasn’t the tariffs imposed then but rather the removal of higher tariffs that preceded that era.
Economic Implications
The full economic impact of the newly imposed tariffs remains uncertain and will depend largely on their duration and the reactions from global trading partners. Both Trump and Treasury Secretary Scott Bessent suggested that these rates could decrease if foreign nations adjust their trade policies accordingly. However, JPMorgan global economist Nora Szentivanyi cautioned that sustained tariffs could potentially lead the U.S. and global economies into a recession.
Conclusion
As the U.S. embarks on this new tariff regime, businesses and economies worldwide will likely feel the repercussions. Stakeholders will be closely watching the developments to gauge the long-term effects on international trade and domestic economic stability.