Just one month ago, in the Rose Garden of the White House and in front of his government's top officials, President Donald Trump stated that "April 2, 2025, will be forever remembered as the day the American industry was reborn. The day the destiny of the United States was regained. The day we started to enrich ourselves again." Trump, echoing his usual narrative that the country "has been plundered and exploited by nations near and far, both friends and foes," for decades, insisted that he would put an end to the "anguish" of workers overwhelmed by "foreign leaders stealing our jobs, foreign scammers looting our factories, and foreign vultures destroying our once beautiful American dream." The Republican leader promised prosperity and well-being, but in the past month, all citizens have seen and suffered is chaos, maximum uncertainty, massive losses in the stock market, price hikes, and threats of shortages in supermarket shelves.
The provisional balance is devastating. Trillions of dollars in stocks burned; the lowest approval rating for a president in just 100 days, consumer confidence at rock bottom. And above all, a contraction of one-tenth in an economy that closed 2024 with an annualized growth of 2.4%. A somewhat misleading figure, more related to how the GDP is calculated than to a paralysis of activity, but in any case a result of tariffs, as the 'distorted' data was from imports, which surged 40% in the weeks leading up to the implementation of the customs protectionism.
But perhaps the most significant is the sense of improvisation and arbitrariness, the uncertainty of not knowing what will happen tomorrow. Politically and regulatory-wise, rules change according to the president's tweets. Based on the latest thing he saw on TV, a phone call, or a negative figure on his screen. "Tariffs are wonderful for us. They will enrich us greatly, we will pay off the debt, and so much money will be collected that we can reduce your taxes. We are in an amazing moment; the spirit we have in this country right now is greater than ever," he stated at an event on Thursday.
Trump has been shaping his trade war with the entire planet for not just months, but years. However, his master plan, vigorously defended on social media and in his daily press briefings, lasted less than three days, the time it took for the bond markets to subject the administration to a half-point rise in bond yields. Since then, it has been all about patches, backtracking, exemptions, and changes.
In 2017 and in the early weeks of this year, the president did the same with Mexico and Canada, imposing trade sanctions in the form of tariffs and then suspending them days later. This time, he announced an almost 180º turn, forgetting about tariffs of 20%, 30%, and even 90% on European and Asian countries and lowering them to a universal 10%, immediately easing the markets and the rest of the world. It still stands as the highest protectionist barrier in a century, but nothing like before. This will likely have a similar effect on the GDP in the second quarter because with a new 90-day moratorium, those wanting to place products, even with a 10% price increase, will do so immediately to avoid surcharges that could double or triple their price in 90 days when the umpteenth extension expires.
But that's not all. Just hours after the Liberation Day, over the weekend, the country discovered through hidden customs guidelines that Trump had granted an exemption for smartphones, laptops, chips, and other electronic products, the bulk of what the US buys from China. So, the tariffs from the giant Asian nation, up to 145% on paper, only affected a specific range of products. The White House claimed it was not a backtrack but that they were preparing another set of measures for chips, semiconductors, and other goods, to be revealed later. However, everyone interpreted it as a new twist, as it confirmed that certain companies could be spared from the worst, those that manage to convince him. For example, major automakers have managed to exempt vehicle components from accumulated tariffs, so if they already pay one, they won't pay others, like those on steel.
In recent days, Trump's advisors and ministers have struggled on camera to defend their leader's whims, who claims, for example, that they have already signed 200 trade agreements with other countries, when in reality, nothing has been signed. The Commerce Secretary promised 90 agreements in 90 days, but nothing materialized. "I think the president is referring to verbal agreements," Treasury Secretary Scott Bessent tried to explain. "Or partial agreements before the final one."
On Thursday, the US Chamber of Commerce sent a letter to the Trump administration requesting an exclusion process from tariffs to prevent the US economy from entering a recession and causing irreparable damage to small businesses. In the letter, the influential business lobbying group wants importers from small businesses and all products that cannot be produced in the US or are not available in the country to be exempted. Mike Miller, one of Trump's lieutenants in the White House, bluntly responded in a press briefing that "relief for small businesses will come in the form of the largest tax cut in history." They remain convinced that thanks to the revenue the government will receive from tariffs, it will be able to practically replace income tax revenue, reverting to the late 19th-century system.
Yesterday, in a call with analysts, the CEO of McDonald's warned of the consequences of this aggressive policy. "There has been an increase in the number of people in several markets saying they will reduce the purchase of American brands. And we have seen a rise in anti-American sentiment, let's say, by 8 to 10 percentage points. More pronounced in Northern Europe and Canada," he pointed out. Amazon was about to start indicating the cost of tariffs in their prices until Trump called Jeff Bezos, who stopped it. And executives from Target, Walmart, or Best Buy have not only warned of lower profits and higher prices but also of risks of empty shelves.