Trump's tariff policy: A day of liberation” or economic ruin?

Trump's tariff policy: A day of liberation” or economic ruin?

On April 2, 2025, US President Donald Trump proclaimed the day “Liberation Day”, triggering a wave of criticism in the USA. Trump views the United States' trade deficits with countries like Germany and China as a national disgrace and plans to end these deficits with tough tariff policies. This move could have serious consequences for the global trade order, which the United States has long helped shape. Critics fear that the new tariff policy threatens the existing order that has fostered prosperity in many countries. Oekonews reports that On the first day of the new tariffs, stock prices in the USA fell and leading US scientists protested against these measures.

Trump has said he will impose tariffs of 10% as a standard, 20% on European goods, over 30% on China and nearly 50% on Vietnam. He describes these measures as retaliation for the treatment of the United States by other countries. However, economists, including David Ricardo, argue that free trade maximizes the prosperity of all countries. The theory of comparative cost advantage suggests that countries should specialize in the production of goods that they can produce most cheaply. Higher tariffs could hurt global trade and particularly hit the U.S. economy, which relies heavily on imports.

Economic impact of customs policy

Prices in the US could rise due to increased tariffs, which would lead to inflation. Socially disadvantaged Americans in particular would be affected by rising prices. In addition, China has already announced counter tariffs of 34% on US products, which is further fueling trade conflicts. Trump's policy aims to encourage foreign companies to relocate jobs to the United States, but many industries would not benefit from such a measure.

Although imposing tariffs is a trade policy tool, extending them in this form could lead to a global economic crisis, including rising unemployment and falling corporate profits. The United States must face the reality that declining free trade is also putting a strain on jobs in the country, as has been the case in the past. Experts say tariffs are closely linked to the trend toward globalization and the reduction of trade barriers that began after World War II.

Protectionism and its consequences

The return to high tariffs is not new; Jürgen Matthes from the German Economic Institute calls the development a repeated trend towards protectionism since the financial crisis of 2008/2009. Historically, tariffs have helped many countries, including the United States and Germany, during their industrialization. However, in the current global trade landscape organized by the World Trade Organization (WTO), there are strict rules that limit interference in trade relationships.

The WTO promotes the liberalization of world trade without, however, setting direct requirements for tariffs. Under the Obama regime, the US criticized the effectiveness of WTO rules, particularly regarding China's unfair subsidies and trade practices. It remains to be seen how current tariff policy will affect the future and stability of global trade, and whether Trump himself as president can maintain support for his course.