Trump Escalates Global Trade War, Markets and Workers Brace for Pain
What just happened?
- At 12:01 a.m. EDT on Thursday, sweeping new U.S. tariffs took effect on products from more than 60 nations plus the European Union.
- Europe, Japan and South Korea face 15 % duties; Taiwan, Vietnam and Bangladesh are hit with 20 %.
- President Trump hailed the moment on Truth Social: “BILLIONS OF DOLLARS … NOW FLOWING INTO THE UNITED STATES.”
The stated goal
White House officials argue the levies will compel foreign firms to invest “hundreds of billions” inside U.S. borders, rebuild the manufacturing base and erase chronic trade deficits. Chief Trump adviser Kevin Hassett insists that once businesses see “clarity,” domestic job growth will follow.
Early evidence: a rockier economy
Hiring freezes and wage pressure
John Silvia, former Wells Fargo senior economist and founder of Dynamic Economic Strategy, writes:
- Job creation has stalled.
- Inflationary pressures are bubbling.
- House prices in key metro areas are slipping.
- Real wages are being eaten away by higher import prices.
The “sand-in-the-gears” scenario
Brad Jensen, Georgetown international-business professor, warns the pain won’t be cinematic: “It will be ‘fine sand in the gears’—quiet, slow degradation, not a sudden collapse.”
Contradictory balance sheet
- Trade deficit widened. Importers front-loaded shipments ahead of tariff deadlines, pushing the gap up 38 % to $582.7 B in the first six months.
- Construction spending down 2.9 % year over year.
- Factory jobs actually shrinking, the opposite of the administration’s promise.
The drama that preceded rollout day
- July 31: An 11th-hour “delay” pushed the start date to “midnight, seven days” later—nobody was certain whether that meant Wednesday night or Thursday.
- Capitol Hill and the USTR offices remained tangled in last-minute changes as foreign delegations begged for mercy.
Global reaction highlights
India
Swift retaliation potential loomed after Trump added 25 % “penalty” tariffs on India for purchasing Russian crude, bringing the total duty level to 50 %. Delhi labels the move “unfair, unjustified and unreasonable.”
Switzerland
Swiss President Karin Keller-Sutter returned empty-handed from Washington after failing to persuade officials to slash the looming 39 % tariff to 10 %.
Legal clouds ahead
A federal appeals-court panel heard arguments last week on whether Trump overreached by invoking the 1977 “national emergency” statute. A ruling could force him to find new legal footing.
Former House Speaker Paul Ryan, hardly a critic of the past GOP president, puts it bluntly: “There’s no rationale except his whim.”
Markets say Bah, so far
Despite the tariff uncertainty, the S&P 500 is up over 25 % from its April low, buoyed by hopes of the July tax package and the “America investment” narrative.
Bottom line
While Trump tweets triumph and markets soar, economists warn families are already paying via higher prices, battered job prospects and rising uncertainty. The only certainty: further turbulence lies ahead.
