Mark Leonard's World in 30 Minutes Trump’s tariff bombshell: Rewriting the rules of global trade
Apr 3, 2025
In a gripping conversation, Agathe Demarais, an ECFR senior policy fellow specializing in geoeconomics, discusses the fallout from Donald Trump’s startling tariff announcements. They dive into the potential economic turmoil facing the U.S., including inflation and a looming recession. The duo considers Europe's strategic responses and the fractures in global trade, questioning whether this marks a temporary disruption or the rise of a chaotic economic landscape. They also touch on the shifting dynamics of globalization and the influence of tariffs on consumer behavior.
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Tariff Revolution
- Trump's tariff plan is illogical and economically harmful to the US.
- It's a tariff revolution that uses exotic calculations, dividing the US trade deficit by imports.
Tariff Impact
- US importers will pay the 20% tariff, likely passing increased costs to consumers.
- This will cause inflation and potentially a recession, especially given Goldman Sachs' prediction.
Exchange Rates and Tariffs
- Economists suggest exchange rates could offset tariff price increases.
- However, historical data shows US firms typically pass costs to consumers, making significant appreciation unlikely.