Trump has invoked the International Emergency Economic Powers Act of 1977 to tackle what he called a “national emergency” caused by ongoing trade deficits. “Our country and its taxpayers have been ripped off for more than 50 years,” he said on April 2.
According to a factsheet shared by the White House, the US manufacturing sector has taken one of the biggest hits in history. Nearly 5 million manufacturing jobs disappeared between 1997 and 2024, and the country’s share in global manufacturing has dropped sharply from 28.4% in 2001 to 17.4% in 2023.Also read: Trump throws half a punch: 26% reciprocal tariff on imports from India
These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated, the statement added. The executive order would also allow Trump to increase the tariffs if he sees the need for it.
The national emergency declaration targets several economic problems that the Trump administration says plague the American economy. This move, according to the White House, could boost the economy by $728 billion and add 2.8 million jobs.
However, experts believe it will lead to an increase in the cost incurred by American consumers, and lead to a further slump in an already sluggish economy, which could hurtle towards a recession this year.Trump has used tariffs as a negotiating tool with other countries in the past and it isn’t clear if he’d do the same again. The emergency declaration, per the White House, tackles “non-monetary barriers” like currency manipulation, value-added taxes, and what Trump calls “pollution havens”. These practices, among other technical barriers to trade and weak intellectual property protections, create major trade imbalances even when tariff rates match, Trump said.
Also read: What will be the impact of Trump reciprocal tariffs on India?
It is also important to see how other large economies like China, European Union, and Japan react to the latest increase in tariffs.
After Trump increased the tariff on Chinese imports to 20% in February, Beijing’s response came almost immediately. China imposed additional duty of 15% on US chicken, wheat, corn, and cotton imports, along with a 10% tariff on American sorghum, soybeans, pork, and beef. The country banned 15 US defence-related entities from importing dual-use technologies and added 10 American companies to its Unreliable Entity List. Similar retaliation could worsen a trade war that threatens to derail global economic recovery.
While Trump hopes to bring back manufacturing jobs to the US, most estimates project a loss of purchasing power for American consumers.
The financial markets took a sharp dive after Trump declared a national emergency, as investors rushed to evaluate how sweeping tariffs would affect the economy.
Also read: Trump Reciprocal Tariffs: Nike, Lululemon shares fall up to 11% on Vietnam, Cambodia levies
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