How dangerous are these “Reciprocal tariffs”?

 

How dangerous are these “Reciprocal tariffs”?

 U.S. President Donald Trump has introduced “Reciprocal Tariffs” which approximately cost American people 5 Trillion U.S. dollars in just a few days. So, what could this decision by the President mean for you?

What is a Tariff?

A tariff is a form of tax, which the government charges on goods and services if the products and services are imported from other countries.

Example

U.S. business imports kid’s toys from China.

• Each toy costs $10
• U.S tariff for China is 10%
• Profit for business is $5
• The final Price of the toy is $16

However, a change in the percentage of tariffs would directly affect the final price of the product that the customer pays.

                                               To 5 U.S trading partners

                      Exports                                                                             

• Canada $356.5B                                                                             
• European Union $350.8B
• Mexico $324.3B
• China $150B                                                                            
  
• Japan 80.2B

             Imports

• European Union $553.3B
• China %536.3
• Mexico 454.8
• Canada 436.6
• Japan 146.6

U.S. has a trade deficit of just over 1 Trillion U.S. dollars as of 2025. This means the U.S. is buying more than selling its products and services.

Trade Deficiency

                  Advantages

• Shifting to an advanced economy
• Cheaper goods
• Less pollution in local areas
• Attract foreign investment

               Disadvantage

• Weaker economy
• Loss of low-skilled jobs
• Living standards being dropped
• Weaker currency
• Politicized

                                                                What is Trump’s plan?

U.S. president would like to make the goods and services more expensive from other countries hence they can be produced domestically, which would result in more jobs in the country.

                                                       U.S economic challenges

• Overall Debt $36T
• Trade deficit $1T
• Budget deficit $1.8T
• Loan that needs to be retired by 2026 $9T

Donald Trump plans to at least minimize the 1 Trillion trade deficit, which would help the economy and create new jobs domestically. However, many economists and experts in the field believe otherwise. Some economists would argue the plan would only work if Donald Trump was the president of a developing nation but the U.S. current status on the global stage would only work against it.

By increasing tariffs president is risking the U.S of:

• Inflation – American people would have to pay a higher price due to higher tariffs.
• Expensive labour – domestically produced products would be more expensive due to higher labour costs in the U.S., which would again result in inflation.
• High immigration – to meet the domestic demand U.S. would have to grant more visas for people to work in the factories.
• New production would not be environmentally friendly.
• U.S. global alliance will be weakened.
• China and the U.S. conflict would become more aggressive.
• The global capitalist system would be volatile.
• The chances of a hot war would be increased.