Trump is betting the economy on his tariff theory

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🗓️ 1 April 2025

⏱️ 11 minutes

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Summary

In President Donald Trump's telling, tariffs are the political equivalent of duct tape: you can use them to fix anything.

For example, they're a negotiating tool — he used the threat of tariffs to pressure Canada and Mexico to implement border policies he liked. He also sees tariffs as a revenue source that might help offset his proposed $4.5 trillion in tax cuts and as a shield to protect American manufacturing jobs from overseas competition.

With all of these potentially conflicting aims, and with another major round of tariffs expected to be announced on Wednesday, what is the strategy behind them?

Rana Foroohar, a Financial Times columnist and the author of Homecoming: The Path to Prosperity in a Post-Global World, says they're an "experiment" that could lead to a big change in the way the global economy works.

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Transcript

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0:00.0	President Trump has billed Wednesday as a pivotal moment in his administration.
0:05.4	We have Liberation Day, as you know, on April 2nd.
0:09.0	This is the day we will find out what is included in his latest package of tariffs, which
0:14.3	she has called the big one.
0:16.6	I call it a lot of different names, but it's really, in a sense, it's a rebirth of a country.
0:21.5	The White House says the tariffs will take effect immediately.
0:24.7	These would be on top of the tariffs that President Trump has already announced,
0:28.9	which if you have lost track by now, include a 25% tariff on imported cars,
0:34.2	and across the board 20% tariff on products coming from China and up to 25% tariffs on some goods from Canada and Mexico.
0:43.9	Trump loves these tariffs, but many economists do not.
0:48.7	Like Mark Zandi, who told NPR on Tuesday that the U.S. is in a trade war.
0:53.2	We're raising tariffs on our trading partners. They're responding with tariffs on our products.
0:58.5	We're lobbying nasty rhetoric at them. They're doing the same to us.
1:02.4	Zandi says the risk of a recession is uncomfortably high.
1:06.2	The economic damage so far has been modest. But with each passing day that the war continues, the damage is
1:12.0	starting to mount. The Trump administration has acknowledged that there may be some negative short-term
1:17.1	impact. They call it a detox period or a disturbance. But Trump says tariffs will ultimately
1:23.7	reshape the economy for the better, or as he put it in his joint address to Congress.
1:28.8	Tariffs are about making America rich again and making America great again and it's happening and it will happen rather quickly.
1:36.1	Consider this. Trump is betting big on his tariffs plan. He's staking the U.S. economy on it.
1:47.5	From N.S. economy on it. From NPR, I'm Elsa Chang.
1:52.7	This message comes from Wise, the app for doing things in other currencies.
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