Trump's tariffs raise the specter of a US recession

WashingtonAfter setting the markets on fire, bringing down Wall Street, and with the rest of the world promising a response to his tariff war, US President Donald Trump has gone to play golf in Miami. The president's agenda only included an intelligence briefing in the morning, and the only other plans were the flights he would take to get to the golf club. Before boarding the helicopter to the airport, Trump predicted a "boom" in the markets.

Meanwhile, in Detroit, 900 workers from the automotive giant Stellantis were temporarily laid off after the company halted its assembly plants in Mexico and Canada as a result of the tariffs. Trump promised this Wednesday that this measure would improve the situation of the American working class and bring wealth back to the country.

free fall of the main stock market indicators has raised the specter of a possible recession in the United States. JP Morgan predicts that Trump's trade policy, if fully implemented, could plunge the country and, in turn, the rest of the world into an economic crisis. "We emphasize that these policies, if maintained, will likely push the US and global economies into a recession this year," wrote Nora Szentivanyi, global economist at JPMorgan, in her analysis on Thursday. In the minds of economists, this tariff episode is reminiscent of the time when former Federal Reserve Chairman Paul Volcker suddenly raised interest rates in the early 1980s, plunging the US economy into a recession.

The president claimed on Thursday that the announcement of his tariff schedule was "a historic day" for the country, and he was right: after mortally wounding international multilateralism and breaking alliances with old friends to get closer to Russia, Trump has also blown up the economic order just as he was done. "The economic independence of the United States" Regarding the world Trump declared yesterday from the White House, it threatens to become a tariff wall. Canadian Prime Minister Mark Carney summed up the situation this way: "The global economy is completely different today than it was yesterday. The global trading system anchored in the United States is over."

In the case of Canada and Mexico, tariffs on goods and products linked to the USMCA remain on hold, although their vehicles are already being taxed at 25%. The taxes on car imports are the first to go into effect since "liberation day." 10% universal tariffs on all imports will be applied on Saturday, and reciprocal tariffs will go into effect starting April 9.

In this scenario, China faces an additional 34% tariff on top of the total 20% tariffs implemented since February. When combined with tariffs from previous administrations, economists estimate that the Asian giant now faces a total tariff of 65% to 70%. Vietnam faces a 46% tariff, and the European Union, a 20% tariff.

Trump defends the tariffs as a way to attract factories to the United States and reindustrialize a country that knows firsthand the effects of globalization and offshoring. Still, the president has previously acknowledged that his policies could ultimately create a "minor disruption" in consumers' pockets. He even told reporters that he wouldn't rule out a possible recession.

Trump has applied his diplomatic unilateralism to trade, thus delivering the final blow to the deteriorating relations with long-standing allies. Early Thursday morning the President of the European Commission, Ursula von der Leyen, warned Washington that there would be consequences. So did China. Even Israel, America's great partner in the Middle East, couldn't believe that Trump had imposed tariffs on them after the country canceled taxes on American imports earlier this week.