It has been driven forward by two interconnected objectives. On the economic front, it seeks to extract hundreds of billions of dollars in tariff hikes, ultimately paid for by U.S. companies and consumers, to shore up the ever-worsening trade and financial position of the U.S., while weakening its global economic rivals, particularly China, to improve its trade position.
It also aims to enhance U.S. military capacity by using tariffs to force companies, foreign and domestic, to increase the level of their operations on American soil, much of which is needed to supply the military.
Under the new regime, the U.S. will impose “reciprocal tariffs” on a range of countries. The tariff is not determined by the tariff actually charged on U.S. exports.
Rather, a number has been assigned to each of the countries involved. This includes not only the tariff charged on U.S. exports, but all measures such as subsidies, regulations, bio-security measures for agricultural products, and the value of the currency, which the U.S. considers to have the same effect as a tariff in discriminating against the U.S.
The reciprocal tariff to be charged has been set at half that number. Thus, for China, a key target of the new regime, the number assigned to it by U.S. economic officials is 67, and the reciprocal tariff will be 34 percent. This will be on top of the 20 percent tariff already imposed on Chinese goods, bringing the total tariff level to 54 percent.
One of the immediate effects of the tariff hike, set to come into effect on April 9, will be a major price increase for a vast range of goods made in China and purchased by American consumers.
The European Union, which Trump has denounced as an organisation set up to “screw” the U.S., has been assigned the number 39, and the tariff impost will be 20 percent.
Southeast Asian countries—a number of which have become a center of manufacturing operations for many companies seeking to escape the effect of trade bans on China—will be hit even harder. The tariff for Thailand will be 36 percent, Malaysia 24 percent and Vietnam 46 percent.
The tariff for South Korea, already hit by the 25 percent tariff on “foreign-made” cars, which came into effect at midnight, will be 25 percent. And the list goes on.
All countries not hit with a “reciprocal tariff” will have a 10 percent tariff imposed on their exports, in a measure aimed, in part, at preventing companies from transferring some of their operations to countries not specifically targeted by the U.S. Now there is nowhere in the world they can go.
Trump began his presentation of the new tariff regime in the White House Rose Garden with his now customary rant against the rest of the world.
“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” he said, remarking later that in some cases friends had been worse than foes.
For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper.
However, the repeated claims by Trump that the tariff measures are going to produce a new golden age for the U.S. are a fiction. They will not bring down inflation but raise prices on a vast range of goods. The auto tariffs are set to raise prices on cars from anywhere between $3,000 and $10,000.
Thousands of jobs will be lost, and any new plants set up in the U.S. will be highly automated, with a small labour force to cut costs.
Furthermore, the so-called “American-made” is non-existent. Every car in the world, including in the U.S., is the product of a complex international division of labour. For example, the Ford F-150 pickup truck, one of the standard bearers for what is regarded as an “American” car, comprises thousands of parts imported from all over the world.
Trump claims the new tariff regime is a magic cure-all that is going to both pay down U.S. government debt and reduce the trade deficit.
But estimates of the expected tariff revenue, according to Capital Economics, are that at most, it will bring in around $800 billion.
The interest bill alone on the U.S. debt, now at around $36 trillion and rising, is $1 trillion every year as it fast becomes the biggest item in the budget.
The trade policies of the Trump administration are internally contradictory. On the one hand, it wants to expand U.S. export markets by weakening the value of the U.S. dollar, thereby making American goods cheaper in world markets. But maintenance of its reserve currency status, which Trump regards as an existential issue for the U.S.—losing it, he has said, would be the equivalent of losing a war—depends on a strong dollar.
Moreover, however much Trump harks back to President William McKinley and his tariff regime at the turn of the 20th century, the U.S. economy has long outgrown its national borders and is dependent on an expanding global economy.
But the global economy, already experiencing some of the lowest growth in decades, is now about to take another major blow. According to calculations published earlier this week in the Financial Times, the overall hit to the world economy could be in the order of $1.4 trillion if, as is virtually certain, there is retaliation.
On top of this, there is growing nervousness in financial markets—already in a fragile condition because of the rise in global debt—both of governments and corporations.
This was expressed in the letter by Larry Fink, the chief executive of BlackRock, the world’s largest asset management firm, to shareholders this week. He said, “protectionism has returned in force” and that in his conversations, people were “more anxious about the economy than at any time in recent memory.”
Recent memory, it should be noted, includes the global financial crisis of 2008 and the financial crisis of March 2020, which saw the freezing of the U.S. Treasury bond market.
Trump is imposing the sweeping tariff regime under the International Emergency Economic Powers Act of 1977, passed under the Democratic Carter administration, which gives him the power to declare a national emergency if there is an “unusual and extraordinary” threat from outside the U.S. that impacts national security, foreign policy or the economy.
The so-called Fact Sheet issued by the White House said the national emergency was the result of the large and persistent trade deficit. It was $918 billion in 2024, an increase of 17 percent from the previous year.
The White House statement made clear that military considerations are a central driving force of the new tariff regime. The “reciprocal tariffs” are directed against countries “with which the U.S. has the largest trade deficits,” but virtually every time economic matters are raised in the document, they are linked with military issues.
It said that “pernicious” economic policies and practices of trading partners undermined U.S. ability to produce goods for the public “and the military, threatening national security.”
“‘Made in America’,” it declared,
is not just a tagline—it’s an economic and national security priority of this administration.
U.S. stockpiles of military goods were “too low to be compatible with national defense interests,” and developments in bio-manufacturing, batteries and microelectronics had to be made “to support defense needs.”
Explaining the focus on non-tariff barriers, particularly with regard to China, it said they had not only undermined U.S. competitiveness but threatened “U.S. economic and national security by increasing our reliance on foreign-controlled supply chains for critical industries, as well as everyday goods.”
The Fact Sheet outlined the central core of the economic war.
“Today’s IEEPA Order,” it said,
also contains modification authority, allowing President Trump to increase the tariff if trading partners retaliate or decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.
In other words, get in line or you will be hit—and even harder if you lift a finger.
The tariff measures are not just a preparation for war—they are certainly that, and in earlier times could have been considered an act of war. Today, the lines between the states of war and peace are blurred, as the war on the economic front is tied directly to the expansionist drive of U.S. imperialism—the threats to make Canada the 51st state, the ongoing operations to take over Greenland, and the increased bombing of the Houthis in Yemen, to name just a few.