Trump's Tariff Pause is Still Economically Damaging

 M A Hossain,

Donald Trump’s retreat from his sweeping “reciprocal” tariff plan—excluding China—was not strategic recalibration but a reluctant nod to economic facts. His vision of a protectionist America collided with the harsh truth that trade wars are neither easy to win nor painless to fight. Economic modeling had painted a dire picture: had Trump’s full plan been enacted, U.S. real consumption would have declined by 2.4%, GDP by 2.6%, and employment by 2.7% by 2025. For an economy near full employment, the outcome would’ve meant millions of lost jobs and prolonged economic stagnation.

Even the revised plan—a 10% blanket tariff on most imports and 125% on Chinese goods—remains damaging. Consumption is projected to drop by 1.9%, investment by 4.8%, and employment by 2.1%. These figures don’t reflect resilience—they reveal persistent harm. Worse, the structure of the tariffs is incoherent. Many taxed imports, like bananas or minerals, aren’t produced in the U.S., so the duties raise consumer prices without reviving domestic industries. And attempts to reshore low-wage manufacturing ignore the reality that such sectors aren’t coming back—and shouldn’t. The goal should be to create high-wage, high-skill jobs, not resurrect sweatshops.

Tariff unpredictability deters investment. Businesses won’t commit capital if policy flips with presidential whims. Supply chains today are global—an iPhone relies on 40 countries; a Ford truck on dozens more. Reconstructing such systems domestically takes decades, not election cycles. Moreover, the legal basis of Trump’s tariffs, rooted in emergency powers, strains credibility. Even if new factories emerge, they will be automated, offering few jobs to unskilled labor.

Trump’s decision to penalize allies like the UK and Australia—while sparing Russia—is both strategically baffling and diplomatically corrosive. It invites charges of arbitrariness and threatens to weaken ties with long-standing partners. Trade deficits, often framed as weaknesses, can actually shrink in recessions—making them poor indicators of national strength.

By disregarding WTO rules and alienating allies, the U.S. risks eroding global trust and ceding economic leadership. Countries shut out by U.S. tariffs may simply deepen trade with China—defeating the very goal of containment. A smarter approach would involve targeted, alliance-backed tariffs addressing real concerns like IP theft or state subsidies. Instead, Trump’s tariffs function as self-inflicted wounds, undermining both economic strength and international influence.

This article published at :

1. South China Morning Post, HK, 12 April, 25