The Hindu: Published on 19th April 2025:
Why in News?
Former U.S. President Donald Trump’s sweeping new tariffs, announced on April 2 as "Liberation Day," have triggered a political and economic storm:
A 10% universal tariff on all imports and 145% tariff on Chinese goods.
Sparked global market panic, U.S. bond sell-off, and a trade war escalation with China.
Led to a fracture in Republican Party unity, rising criticism from business leaders, and a drop in Trump's approval ratings.
Background-
Trump has long used tariffs as an economic weapon to boost American manufacturing.
His latest tariffs triggered retaliation from China, including 125% tariffs on U.S. goods.
Major concerns have emerged over inflation, supply chain issues, and America's global economic reliability.
Political Impact: Cracks in the Republican Party-
- GOP traditionally supports free trade. These massive tariffs have divided the party:
- Elon Musk, a Trump donor, opposed the tariffs and clashed publicly with Peter Navarro (Trump adviser).
- Bill Ackman warned of an “economic nuclear winter” before praising the 90-day pause as a strategic move.
- Conservative commentator Ben Shapiro criticized the tariff rollout as “disastrous.”
- Influencer David Portnoy claimed to lose $20 million after the tariff announcement.
- Several Republican senators joined Democrats to support a Trade Review Act, seeking to restrict the President's unilateral power on tariffs — signaling weakening internal support.
Economic Consequences-
Market Reaction
Stock and bond markets plunged.
Panic forced the President to pause most tariffs for 90 days, excluding China.
Impact on Farmers & Exports-
- U.S. agriculture faced the brunt of Chinese retaliation.
- The American Farm Bureau warned that farmers could face devastation from input cost hikes and reduced export access.
- Farmers lost Chinese markets in the 2018 trade war, and soybean and beef exporters are still struggling.
Investor Response-
Bond markets showed volatility; investors demanded higher yields for U.S. debt.
Analysts estimate a 45% recession risk (Goldman Sachs).
The S&P 500, NASDAQ, and other indices suffered steep losses before partially recovering post-pause.
Public Opinion & Polls-
Trump’s approval rating dipped to 43%, the lowest since his return to office.
Economist/YouGov found a 5-point rise in disapproval post-announcement.
Voters expressed scepticism toward the tariffs and Trump’s economic leadership.
Upcoming Elections Impact-
The 2025 Virginia gubernatorial race is seen as a bellwether.
Democrats are running ads linking economic chaos to Trump’s tariff policy.
Trump’s declining popularity may hurt the GOP in the 2026 House elections, where all seats are up for grabs.
International Relations & Trade War with China-
The new tariffs revived tensions from the original 2018 trade war.
China responded with retaliatory measures, especially targeting U.S. agriculture.
Trump justified the move as a fight for U.S. economic sovereignty.
However, critics argue it shows the limits of unilateralism in a global economy.
Expert Views-
David Richards (University of Lynchburg):
“The GOP is publicly united but privately divided... swing district Republicans fear backlash.”
Treasury Secretary Scott Bessent:
Framed the 90-day pause as a calculated negotiation move, not retreat.
Trump’s claim:
“I know what the hell I’m doing… Countries are lining up to make deals.”
Key Takeaways-
- Internal dissent is rising within GOP ranks.
- The economic fallout is real and affecting Trump’s approval and investor confidence.
- Tariff pause signals Trump’s awareness of political and market limits.
- The 2025 and 2026 elections could reflect how much this policy shift reshapes U.S. political alignment.
