Why Trump 2.0 would make the world poorer

Donald Trump’s plan to slap steep tariffs on all imports if he is elected risks provoking trade wars that would hurt global economic growth and weigh on stock markets, eating into people’s pension pots and other invested savings.

When the United States hiked tariffs on most goods entering the country almost a century ago, the consequences were severe: global trade plummeted and US exports collapsed, as other countries retaliated in kind, deepening one of the world’s worst ever economic downturns — the Great Depression. The tariffs in question, levied under the Smoot-Hawley Tariff Act of 1930, would be dwarfed by the duties that Donald Trump has pledged to impose if he wins a second term in the White House. Alongside other radical ideas — including mass deportations of undocumented immigrants and interfering with the independence of the Federal Reserve — Trump has said he wants to slap 10-20% tariffs on all goods imported into the United States. That would be sharply up from the current average of 2% on non-agricultural, or so-called industrial, goods, half of which enter the US duty-free, according to the government. For Chinese imports, Trump has proposed an even steeper 60% tariff. “To me, the most beautiful word in the dictionary is ‘tariff.’ It’s my favorite word,” he said during an interview with Bloomberg last week at the Economic Club of Chicago. Most economists do not share Trump’s fondness for tariffs because they act as a tax on imports, hurting consumers in the country imposing them, as well as businesses that rely on imported raw materials and intermediate goods to make finished products.