What will happen to the US economy after Mr. Trump imposes tariffs?

US President Donald Trump with the executive order on tariffs in the Rose Garden at the White House on April 2 - Photo: REUTERS

Unprecedented tariff storm

During a ceremony at the White House Rose Garden on April 2 local time (early morning of April 3 Vietnam time), US President Donald Trump held up a board detailing each reciprocal tax rate that will be applied to dozens of economies around the world.

"This is our declaration of independence," Trump shouted.

The “base” tariff rate applied to all goods imported into the US is 10%. Some countries in this group include the UK, Brazil, Singapore, Australia, Chile, Argentina, Saudi Arabia...

The European Union (EU), Malaysia, Japan, South Korea, and India are subject to tariffs of 20-26%. Notably, China and Vietnam are among the groups subject to the highest reciprocal tariffs, at 34% and 46%, respectively.

Reuters news agency quoted an unnamed senior US official as saying that the basic tax rate of 10% will take effect from April 5. Meanwhile, for economies subject to higher tax rates, implementation will begin from April 9.

Can tariffs help "recover" America?

The Center for American Progress (CAP) estimates that Mr. Trump's tariffs could cost American households an average of $5,200 a year.

Tariffs and retaliatory measures would cause significant damage to the U.S. economy, including potentially raising prices on electricity, cars, consumer goods and other goods, and making it harder for businesses to compete in global markets.

In addition, investors have also "fled" the US stock market as they reacted strongly to Mr. Trump's plan to impose reciprocal tariffs.

However, according to US Trade Representative Robert Lighthizer, tariffs are a way to bring manufacturing back.

As prices rise, consumption may fall. But that helps reduce the fiscal deficit because excessive US spending on foreign goods "depresses production and the saving rate."

Mr Trump has also described the trade deficit as a "national emergency" and his actions would usher in a "golden age of America".

The high tariffs would help revive US manufacturing in key sectors such as semiconductors, electric vehicles and alternative energy as companies are shifting investment to the US to avoid tariffs.

Not only that, tariffs would also be a means to "win concessions from other countries as well as demonstrate American power".

"The White House statement shows that they are willing to accept short-term economic weakness to pursue their policies," said economists at Goldman Sachs.

President Trump speaks about the reciprocal tax table in the Rose Garden at the White House on April 2 - Photo: REUTERS

Reaction from American public opinion

President Donald Trump's approval rating has fallen to 43%, the lowest since he returned to office, as Americans are unhappy with his tariff moves, according to a three-day Reuters poll that ended on April 2.

Respondents gave Mr Trump poor marks for his handling of the economy, with some saying the tax hikes would do more harm than good, largely because they would “fuel inflation and slow economic growth”.

“This is a disaster for American families,” said Matt Priest, president and CEO of Footwear Distributors and Retailers of America.

“We hope the president will take a more targeted approach. Right now, these tariffs will only increase costs, reduce product quality, and undermine consumer confidence.”

The New York Times interviewed a representative at the National Retail Federation in the US who said the tariffs would "cause more anxiety and uncertainty for American businesses and consumers" because "immediate implementation of the tariffs would require a huge effort and preparation by millions of businesses in this country".

However, some other opinions fully support this new tariff, believing that it will contribute to "re-industrializing America and creating jobs for the working class".

“Today is arguably the greatest trade and economic policy action in the history of our country,” said Nick Iacovella, executive vice president of the Alliance for a Prosperous America. “It completely cements President Trump’s legacy of trying to usher in a new golden age of economic productivity and prosperity.”

Meanwhile, American Iron and Steel Institute President Kevin Dempsey also said: "American steelmakers are all too familiar with the harmful effects of unfair foreign trade practices on domestic industries and workers."

Republican Representative Jason Smith expressed optimism that tariffs would be an effective tool to curb abusive trade practices from U.S. partners.

“These tariffs leverage the power of the world’s largest market — the United States — to level the playing field for our farmers, manufacturers, and workers,” Mr. Smith said.

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Source: https://tuoitre.vn/nen-kinh-te-my-se-the-nao-sau-khi-ong-trump-ap-thue-202504031103417.htm