Unmasking Donald: The New Virus Threatening the Global Economy – In-Depth Analysis
In a recent commentary published on April 18, The Times drew a striking comparison between Donald Trump’s extensive tariffs, particularly on China, and the devastating impact of the COVID-19 pandemic on the global economy. The article argues that Trump’s trade policies are a significant source of uncertainty, much like the pandemic was. Below is a detailed excerpt from the article that explores the economic ramifications of Trump’s tariffs.
It has been five years since the world economy faced a catastrophic shock due to the COVID-19 pandemic. While the analogy may seem unusual, we are commemorating this fifth anniversary with a new, yet familiar shock to the global economy. The effects are manifesting in notable ways:
- The number of international passengers flying to the U.S. has dramatically decreased.
- Goods shipments bound for America have come to a halt.
- Many American companies are preparing to raise prices and reduce their workforce.
However, unlike the previous crisis driven by a virus, this new shock is attributed to a “mind virus,” characterized by President Trump’s belief that increasing the average U.S. tariff rate tenfold will rejuvenate American manufacturing jobs to levels not seen since 1972. Some critics have referred to this approach as the economics of Minecraft.
Millions of Americans who supported Trump, whether consciously or not, endorsed a radical shift in U.S. trade policy. Although Trump attempted to implement these changes during his first term, he campaigned as “Tariff Man” in the 2024 elections, citing historical figures like President William McKinley as his inspiration and pledging to enact a Reciprocal Trade Act.
After winning re-election with a larger margin than expected, Trump interpreted this as a mandate to revert economic policies back to 1909, imposing tariffs unprecedented in modern times.
In 2020, the COVID-19 outbreak disrupted global interconnectedness, particularly affecting travel networks. Currently, Trump’s tariffs are similarly disrupting international supply chains. The global response to the pandemic involved fiscal and monetary stimulus; now, nations worldwide are compelled to respond to the ramifications of Trump’s trade policies.
Recent travel data have reignited memories of the pandemic. According to the International Trade Administration, the number of Western European visitors staying at least one night in the U.S. fell by 17% in March compared to the previous year, with some countries experiencing over a 20% decline. Notably, Canadian flight reservations to the U.S. have plummeted by 70%.
This decline in travel is not solely due to Trump’s tariffs but also his contentious relations with American allies. Incidents such as his controversial suggestion that Canada should become the 51st state and his vice-president JD Vance’s confrontational remarks at the Munich Security Conference have left foreign travelers apprehensive. Reports of non-citizens being deported from the U.S. further complicate perceptions.
Nevertheless, the pandemic-like patterns in the global economy are largely influenced by tariffs. The volume of goods entering the Port of Los Angeles has significantly decreased, with daily container bookings along the U.S.-China trade route dropping by 25% since the end of March compared to last year.
On the East Coast, the New York Federal Reserve’s Empire Survey indicates a decline in business confidence even more severe than at the beginning of 2020. Furthermore, indices measuring U.S. and global policy uncertainty underscore that Trump has emerged as a primary source of uncertainty since the pandemic.
Five years ago, uncertainty surrounded COVID-19’s infection fatality rate, leading to drastic recommendations that halted many aspects of daily life. Today, the uncertainty revolves around U.S. tariffs, leaving many unsure of future trade conditions. This unpredictability has resulted in a partial lockdown of trade between the world’s two largest economies, posing significant risks to the global economy.
On April 9, JPMorgan reported an increased likelihood of a recession in the U.S. economy later this year. Additionally, the country narrowly avoided a financial crisis in the bond market, reminiscent of the turmoil in March 2020, when the Federal Reserve intervened to stabilize asset sales.
Understanding why Trump’s trade policies are nearly as disruptive as a pandemic requires a historical perspective on tariffs. From the 1940s to the 2010s, the average U.S. tariff rate consistently declined, reaching a historic low of 1.27% in 2008. Historically, the average rate from 1964 until then was 3.67%.
Following Trump’s “Liberation Day” and despite some reversals, the current average tariff is now above 20%, as reported by Bloomberg Economics. This figure represents a tenfold increase from last year’s average.
This drastic increase in tariffs functions as a tax hike on American consumers. It’s akin to the U.S. imposing economic sanctions on itself, particularly due to the high tariffs on China that have created uncertainties regarding cumulative rates. While the White House claims a rate of 245%, this figure has been contested by the Chinese Foreign Ministry.
Despite recent exemptions on certain tech products, the tariffs effectively restrict a broad range of goods that American businesses have relied on from China. Here are some categories where a significant portion of U.S. imports originated from China in 2023:
- Christmas and other festive goods
- Toys
- Plastic household items
- Games
- Electromechanical domestic appliances
- Lamps
- Rubber or plastic footwear
- Sports equipment
- Electric heaters
- Women’s suits (knit)
- Batteries
- House linen
These items represent what fills the shelves of every Target store across America. The resulting price spikes due to tariffs resemble the supply shocks from the 1970s energy crisis, but unlike that situation, this is a self-imposed crisis driven by governmental policy.
