Bloomberg’s U.S. chief economist Anna Wong published a chart outlining the impact of Trump’s tariff pivot. Trump raised tariffs on China and cut the “reciprocal tariff rate” to 10% for all others, except USMCA members Canada and Mexico, for 90 days. The resulting weighted tariff rate is not substantially different from the “Liberation Day” rates and it remains roughly comparable to the tariff rates of the Smoot-Hawley era. More worrisome is the higher tariff rate on consumer goods under the new regime, which spells stagflation, or higher prices combined with lower growth.
How will the trade war end? Let’s game theory this out.
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