'Looted' Nation: The ultimate guide for decoding of Trump's liberation day rates

Copyright © HT Digital Streams Limit all rights reserved. Economics N Madhavan 8 min Read 06 Apr 2025, 06:26 PM IST who spoke from the White House Rose Garden, Donald Trump charged what he called reciprocal rates on the US trading partners. (Reuters) Summary In 1930, President Herbert Hoover signed the Smoot Hawley tariff law, a protectionist trade measure that introduced 25% on all imports. Important trading partners Canada and Europe retaliation. What happened after this has lessons for Trump and his advisers. Chennai: In 1947, the US led 23 countries to sign the general agreement on rates and trade (GATT). The attempt was to lower trade and tariff barriers under nations. Over the next 48 years, it took eight rounds of careful negotiations before Gatts could develop into the World Trade Organization (WTO) in 1995. On April 2, in a 48 -minute speech, US President Donald Trump effectively smeared this multilateral trading system and indicated a fundamental shift in US trading policy. Trump spoke from the Rose Garden of the White House, and he charged what he called reciprocal rates on all trading partners. The quantum of rates stunned the world. He announced a 10% universal rate on all imports. But countries that enjoyed a trade surplus with the US were hit with much higher rates. No trading partner, large or small, has been spared. China was slapped with a 34% tax, but if one added the 20% tariff imposed earlier, it amounts to 54%. Vietnam got 46%; India 26% and the European Union 20%. These duties are in addition to what different countries have been charged earlier. Even remote uninhabited islands such as Heard and McDonald’s Islands, located 4100 km from Western Australia and home to Penguins and Seals, were hit with a 10% tariff. Australian areas such as Norfolk, Island, Cocos -Islands and Christmas Island with a total population of 4.236 people are also tariff. So was Diego Garcia, a British area in the Indian Ocean with no permanent population. It only houses a joint UK-American military base. A few countries did not appear in the April 2 list -Canada, Mexico, Russia, North Korea, Cuba and Belo -Rusland. Canada and Mexico have been saved because Trump has already levied a 25% rate on all imports of the two countries, excepting the items that fall under the United States Mexico Canada Agreement (USMCA). Russia, Cuba, North Korea and Belo -Rusland are excluded because they are very approved and have no ‘meaningful trade’ with the US. These measures, including the 25% duty imposed earlier on all imports of car and auto parts, take the weighted average rates of us up to 24%. It was about 3%in December last year. According to Fitch Ratings, it would be the highest tariff wall that the US has erected since 1909. And Trump has just set fire to a global trade war – China has refuted by setting up a 34% tariff on US exports; Other countries weigh their options. Share markets around the world have been swimming since its announcement. ‘Looted, pilled’ ‘my fellow Americans, this is the day of liberation. April 2, 2025, will be remembered forever if the day of the American industry was reborn, the day America’s Destiny was recycled and the day we started making America rich again, ‘Trump said, explaining the rationale behind the rates. Read also | The Rate Time Line: How Trump 2.0 policy reforms global trade. “The US has been looted, pillowed, raped and looted by nations near and far, as well as friend as well as enemy … the beautiful American dream,” he added. “That won’t happen anymore.” His anger was focused on the big trading deficit the US shares with its trading partners. In 2024 it amounted to $ 1.2 trillion. He regarded the trade deficit as the leading cause of America’s decline for years. He and his officials conveniently ignored the fact that the US was the largest beneficiary of the multilateral trading system after World War II, his critics pointed out. This made America very rich and gave it the status of a superpower – economically and militarily. By higher rates, Trump hopes not only to eradicate the trade deficit, but restore the US manufacturing to its glory in the past. He said his tariff measures would increase foreign investment as more factories were built in the US. He also hopes to raise significant resources through rates, estimated at $ 100 billion, to finance his proposed tax cuts. Jobs obtained have lost jobs little agrees with his strategy. In the newspaper The Hill, Macabe Keliher, associate professor at Southern Methodist University, Dallas, and an East Asian economic development expert, he argued that rates alone could not rebuild US manufacturing. In 1940, iron ore and rubber entered one end of the Ford’s River Rouge complex and completed cars from the other. Today, a vehicle crosses the US Canada border several times during production to make the manufacturing process effective. The supply chain that once existed, he wrote, was completely eroded. Look at the full image today, a vehicle crosses several times during the production the US Canada border to make the manufacturing process effective. (AP) In the 1950s, the share in the US gross domestic product (GDP) was 25%. Today it is 10%. Higher wages and production costs only moved the manufacturing to low-cost economies such as China and then to countries such as Thailand, Mexico and India. According to the US Labor Division data, factory events were 33% of the total workforce in the 1950s. In 2024 it was only 8.4%. Manufacturing has left the US as the global supply chain efficiency by utilizing the lowest available costs around the world. It will be expensive and ineffective to repeat the supply chain in the US. Experts are not sure how many companies will set up their manufacturing units from the rates. It is expensive to set up factories, and most major players have invested in countries such as Vietnam, Mexico, India and elsewhere quite recently-after the US trade war during Trump 1.0 and during the Covid-19 pandemic. Some companies such as Hyundai, Honda, Apple, Volvo, Audi and Mercedes-Benz said they would increase production in the US. Even if they do, the production lines would be very automatic. It is unlikely to create a large number of jobs, as Trump expects. According to a Federal Reserve study, when Trump imposed steel tariffs during its first term, the increase in posts in the steel sector was far less than those lost elsewhere as a result of higher prices caused by rates. Rates have not revived factory opportunities in the past. According to a Federal Reserve study, when Trump imposed steel tariffs during its first term, the increase in posts in the steel sector was far less than those lost elsewhere as a result of higher prices caused by rates. A similar scenario will play again on a larger scale. Rates are expected to create 1.5 million manufacturing opportunities at best. But according to Moody’s Analytics, the economy will lose 3.5 million jobs if the US has a recession due to the rates. The recession comes in the middle of all this uncertainty, one thing is certain – an economic outage. Trump’s actions further hit the consumer sentiment. This will refrain from expenses. With 70% of US GDP growth dependent on consumer spending, such a scenario will grow. Moody’s Analytics expects GDP growth to reduce by 2% and unemployment rate will rise to 7.5% from the current 4.1%. Worse, the risk of a recession has increased. JP Morgan, an investment bank, says the chance of a US recession by the end of the year has risen to 60%. Inflation is also expected to rise. Federal Reserve chairman Jerome Powell warned that tariffs would accelerate inflation and dampen economic growth. “We are well positioned to wait for greater clarity before considering any adjustments to our policy standing,” he said on Friday. The consultant firm EY said consumer prices will rise by 1% by the end of the year and inflation will push to 4% levels. That was 2.8%in February. The impact on low -income households will amount to $ 1,000 annually, he added. Read also | Trump’s reciprocal rates: India bumps for economic ripples as the US, the world’s largest economy, delayed, global growth will also be hit. Kristalina Georgieva, head of the International Monetary Fund (IMF), warned that Trump’s rates pose a significant threat to the already sluggish global economy. The IMF predicted in January that the global economy would grow by 3.3%. The next update may see a downward review. The WTO said the world trade will contract with 1% in 2025 due to the trade war. According to experts, Trump’s rates will have less impact on India compared to its peers. This is because it is slapped with a lower tariff relative to others. It should give India a competitive advantage when it comes to sectors such as textiles, leather and car components. The most important export sectors, pharmaceutical products and information technology are at least saved for now. But India cannot escape the impact completely. As the US and global economics delay, the exports of India will fall. Other countries clapped with higher duties such as China and Vietnam will flood their stuff at lower costs, which the Indian exporters may praise from many markets. For 2025-26, the Reserve Bank of India estimated the GDP growth at 6.7%. It looks challenging now. Goldman Sachs lowered the forecast by 20 basis points. Morgan Stanley has tied a reduction in growth from 30 to 60 basis points in growth. The main concern for India is to protect the domestic industry. The import of low or predators will flood the country from China, which sits on excess capacity. China’s domestic demand is poor and the inability to export to the US is exacerbating this situation. A price -conscious market like India is a great opportunity for China. Data suggests that imports from China have already seen a sharp increase in recent times. The Indian industry has urged the government to tighten its defense. The Indian government, meanwhile, is negotiating a bilateral trade agreement with the US. The two countries want to trade their trade up to $ 500 billion more than. The industry hopes for a quick agreement that can end the reciprocal rates. Acute pain? The biggest question in everyone’s mind is whether Trump will roll back the rates. In the past six months, the S&P 500, a measure of US stocks, has crashed almost 12%. Investors in the US have lost as much as $ 9 trillion since Trump has held office. Economists have warned against economic problems ahead. The president said he was willing to get “temporary” pain. Stock markets do not bother him as in its first term. He expects countries that depend on the US market to come in and stop transactions. Vietnam has already reached out. Others, he believes, will come too. Nevertheless, Trump, and his advisers, may need to revise history lessons. In 1930, President Herbert Hoover signed the Smoot Hawley tariff law, a protectionist trade measure that put a 25% duty on all imports. Important trading partners Canada and Europe retaliation. The US exports fell sharply, and the measure exacerbated the Great Depression. In 1934, President Franklin Roosevelt had to recall the rates. The world is now ‘flattering’ with countries that have been connected deeper. In 1930, imports were only 3% of US GDP. Today it is 14%. The pain that the country has to bear can be more sharp. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Long Story Mint Specials