Will Trump tariffs cause a recession?

• US President Donald Trump announced a 10% tariff on all imports, marking a significant shift from the 2 to 3% tariffs imposed until 2024.

• About 60 countries will face higher-level tariffs, known as “reciprocal” tariffs, including 20% on the EU, 27% on India, and 46% on Vietnam.

• Mexico and Canada, the US’s neighbors and two of its largest trading partners, were also hit with 25% tariffs in February.

• China, which supplies one-sixth of all foreign goods the U.S. consumes, has imposed 125% tariffs on imports from the U.S., leading to a possible economic recession.

• On April 9, President Trump reversed some of his decisions, announcing a 90-day pause on “reciprocal” tariffs for most countries while insisting that the steep tariffs on China would take immediate effect.

• Tariffs protect domestic industries from foreign competition but may lead to price increases.

• The U.S. has been the largest export market for goods from cars to computers, aiding the creation of manufacturing jobs in several countries.

• Globalisation creates inequalities not only in the developing but also in the developed world. In the U.S., sectors such as steel and automobiles have been among the most hit by import competition.

• President Trump has promised to revive U.S. manufacturing, protecting it from competitors who “rip off” America with their imports.

• With higher tariffs, prices of most goods, especially consumer goods, will move upward, inflicting pain on ordinary Americans.

• China has vowed to “fight till the end” in what may turn out to be a prolonged and bitter trade war.

• India’s options are limited due to the narrowness of its manufacturing capabilities. Tariff protection and the Production Linked Incentive Scheme have not been sufficient to revive this sector.