As Trump’s tariffs take hold, how much pain can Americans handle?
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What are the effects of Trump's tariffs on the global economy?
But first, businesses, economists and governments across the world are still digesting and reacting to sweeping tariffs enacted by the Trump administration. The announcement last week sent markets careening with the S&P 500 hitting the lowest level in almost a year. Last week was the worst for American stocks since the beginning of the pandemic five years ago. Over the weekend, thousands of protesters gathered in Washington, D.C. and in cities across all 50 states to demonstrate against President Trump and Elon Musk in what organizers dubbed hands-off protests. Demonstrators told reporters they were motivated by a diverse list of issues, from Musk's overhaul of government agencies to cuts to medical research to tariffs.
And yet on Sunday, administration officials remained defiant and waved away forecasting that has shown the tariffs could tilt the U.S. economy into a recession. Treasury Secretary Scott Besant made the case on Meet the Press that there are long-term gains to be made here for the U.S. economy.
How are American businesses reacting to the new tariffs?
There doesn't have to be a recession. Who knows how the market is going to react in a day, in a week. What we are looking at is building the long-term economic fundamentals for prosperity that I think the previous administration had put us on the course toward financial calamity.
Besant also claimed that over 50 countries have been in contact with the United States since the announcement in order to begin trade negotiations. President Trump on social media said Americans need to, quote, hang tough and wait for the end result. He also recently said that it could take two years for American manufacturing to grow as a result of this policy. Sean Donnan, a senior writer for economics at Bloomberg News, told us that in the short term, a recession could cause companies to rethink their investment strategies.
If you have a recession in the United States, that by definition means Americans are buying less stuff, that the market in the United States is less attractive than it was otherwise. And so you may have companies also saying, well, hang on a second, maybe now's not the time to invest. If I'm going to be spending billions of dollars to build a factory in the United States, I kind of want some certainty about where we're going, what it is that I'm investing in.
As the White House tries to kind of shock the economy into submission and reshape a global trade order, Donnan said it's going to be key to watch how other countries respond. China has already said that it will impose reciprocal tariffs of 34 percent on all imports from the U.S. beginning this week. The European Union is reportedly preparing a response as well.
What historical events are referenced in the tariff discussion?
As Donnan points out in his reporting, when the U.S. imposed new tariffs in the 1930s, it sparked a broader trade war that is a historical reason for the concern here.
What happened in 1930 after the Smoot-Hawley tariffs went into place is that we saw countries all over the world retaliate. And that just brought global trade to a halt and led to the deepening and the lengthening of the Great Depression.
There are some industries like steel and aluminum that have welcomed tariffs. They've watched their cheaper foreign competitors win business in their markets, and they're eager for change. Some Republican leaders are already expressing worries about future retaliatory tariffs the U.S. could face. And some parts of the organized labor sector that have voiced support are doing so with some caveats.
The labor unions have traditionally been pretty supportive of tariff policy. But one of the things we're seeing this time around is even some protectionist parts of the conversation, those communities, we're seeing people say, well, hang on a second, this may be just going a little bit too far too quickly.
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Chapters
5 chapters
1
What are the effects of Trump's tariffs on the global economy?
0:34–1:35
2
How are American businesses reacting to the new tariffs?
1:35–3:10
3
What historical events are referenced in the tariff discussion?
3:10–4:27
4
How might Venezuelan TPS status changes impact caregiving?
4:27–5:48
5
Who is affected by the uncertainty in TPS status for Venezuelans?
5:48–13:50
Speakers
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