‘Worse than the worst-case scenario’: World tallies staggering cost of Trump’s protectionism

Investors are retreating as the president escalates his trade war, putting the US economy at risk

Containers are stored in a cargo terminal in Frankfurt, Germany, on April 3.Michael Probst/Associated Press

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President Trump is building his wall — and we’re all going to pay for it.

No, not the unfinished border wall that he started in his first term. You remember: the “big, beautiful” one he claimed Mexico was going to foot the bill for.

I’m referring instead to a project global in scope: a bulwark constructed not of steel or concrete but of steep tariffs on imports from more than 100 countries.

On Wednesday, the president detailed a massive escalation of the trade war he launched soon after taking office. It was clear that American consumers and businesses should brace for disruption and economic pain as Trump seeks to impose US hegemony over global trade.

On Thursday, US stocks plunged, with the main US benchmark enduring its worst one-day loss day since the early days of the pandemic in June 2020. Trump’s tariff regime is tougher than many expected, and investors are retreating in fear that inflation will accelerate and economic growth will slow.

“We would characterize this slate of tariffs as ‘worse than the worst-case scenario’ the Street was fearing,” analysts at WedBush Securities said in a note to clients.

The Standard & Poor’s 500 index tumbled 4.8 percent, the most in five years. The Nasdaq, heavy with tech companies that will be hard hit by the tariffs, was down nearly 6 percent.

The declines followed sharp losses in Europe and Asia.

A US recession, economists say, seems more certain as consumers pull back spending in the face of higher prices and businesses respond by cutting spending and jobs. Retaliatory tariffs from abroad are likely, which will hurt many US exporters.

“In the short run, the effect is probably a recession. It’s going to raise the price of so many goods that can’t be made in the United States,” economist Brad Setser of the Council on Foreign Relations told the Washington Post. “In the long run, it’s a vision of the US that is very isolated from the world.”

Isolated — behind a wall of tariffs.

Trump says he’s ushering in a new golden era of American manufacturing. Taxing imports will persuade companies to bring production back to the United States, protect strategically important industries, and raise hundreds of billions of dollars a year in revenue that can be used to shrink the national debt — and, let’s not forget, fund House Republicans’ “big, beautiful bill” to extend his 2017 tax cuts and add more.

More viscerally for the nationalist president, they are a load-bearing support in his “America First” platform.

“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump told a gathering in the White House Rose Garden. “But it is not going to happen anymore.”

The tariff scheme was released two months after Trump fired the first shots in his promised campaign to stop trading partners from “ripping off” the United States.

On Feb. 1, he proposed slapping new tariffs on Canada, Mexico, and China — and what ensued was a head-spinning series of executive orders, threats, and reprisals that rattled consumers and put business plans on hold.

The stock market tumbled. Recession fears climbed.

A few weeks after his initial salvo, Trump promised “reciprocal” tariffs to match the tax rates that other countries charge on goods. The administration had been working on the plan ever since. The final product isn’t exactly a 1-for-1 counter to foreign taxes.

To start, there will be a baseline duty of 10 percent for all countries.

But an additional levy will be added to imports from about 60 countries that Trump considers the worst trade offenders, whom he called foreign cheaters and scavengers who have “ripped off Americans” for 50 years.

Trump said each of these countries’ rates reflected the combination of their tariffs and non-monetary obstacles to importing US goods. But the White House later released a statement that showed the formula was essentially a back-of-the-envelope calculation: their trade deficit with the United States, divided by their exports to the United States.

In an announcement from the White House Rose Garden, Trump said he could have been tougher on other countries but decided to give them a 50 percent “discount.”

“We are being very kind,” he said.

But analysts saw it differently.

“Going light is his talking point, but that is a facade,” said Wayne Winegarden, an economist at the right-leaning Pacific Research Institute. “The result is that the profits for businesses will decline, costs for consumers will increase, and the amount of economic activity in the country will be less.”

A dealmaker at heart, Trump dangled a carrot after whacking countries with a stick. He said countries could reduce the tariffs imposed on them if they dropped their duties on the United States, stopped “manipulating” their currencies, and increased purchases of US goods.

That may happen, but it will take time. Meanwhile, be prepared for everything from avocados to autos to get more expensive.

We are paying for the wall after all — just not the one we thought.