Yesterday Donald Trump announced what amounts to a dramatic escalation of the trade war initiated during his first term. Addressing a crowd of auto union workers at a Rose Garden event at the White House, the president revealed the details of his plan to reset the United States’ relationship with its trading partners, framing his tariffs as a “declaration of economic independence.”

He began his speech with what amounted to a fever dream of American victimhood. Lamenting the “unilateral economic surrender” of his predecessors in the Oval Office, he decried being “looted, pillaged, and raped by friend and foe alike,” who “got rich at [America’s] expense” by way of “undervalued currencies,” “stealing our intellectual property,” and instituting “unfair rules and technical rules.” These trade barriers, whether tariff-based or not, were to be broken down. This effort would “supercharge the domestic industrial base,” while allowing the United States to pay down its national debt and reduce taxes.

The historical record, of course, begs to differ, though economic history does not seem to be Trump’s forte. At one point during his address, the president opined that the United States was “proportionally the richest” between 1789 and 1913, when trade barriers were in place, and that the Great Depression of the 1930s would have not occurred as it had if the ultraprotectionist 1930 Smoot Hawley Tariff Act had stayed in place longer.

Economic historians generally agree that the disastrous set of tariffs on over 20,000 imported goods worsened the Depression. And according to ad hoc estimates done by Evercore ISI, a prominent advisory firm for investment banks, the weighted average tariff rate of the “Liberation Day” measures were just under 30 percent, compared to the 20 percent of Smoot Hawley. All this in an economy in which imports are 14 percent of GPD, compared to 4.5 percent in 1930.

After his historical digression, the president produced a chart of countries with corresponding tariff rates and went through them one by one. Initial reports from the Wall Street Journal and Bloomberg indicated that there would be a 10 percent blanket tariff on all imports. This turned out to be only part of the picture.

The dollar slid sharply, and stock market futures and economic commentators were jolted by the revelation that most major trading partners would be subject to “reciprocal discounted tariffs” based on effective tariff rates that are claimed to account for nontariff barriers like value-added taxes and currency manipulation. Vietnam’s tariff rate for the United States, for instance, is said to be 90 percent, based on which the United States would impose a reciprocal “discounted” (by 50 percent) rate of 45 percent. Other offenders include the European Union (20 percent), Japan (24 percent), and China (34 percent).

According to the text of the corresponding executive order, these reciprocal tariffs will be added to existing ones, yielding a rate of 54 percent for China. The United States’ largest trading partners — those that were set to suffer the greatest economic hit, Canada and Mexico — are exempt from this reciprocal rate. Goods compliant with the United States–Mexico–Canada Agreement signed during Trump’s first term, are not, it seems, subject to the 10 percent additional blanket tariff.

The same will hold for goods that have already come under sectoral tariffs, such as autos and steel. The 25 percent tariffs on “foreign made” autos will come into effect at midnight on Thursday. These carve outs, though relieving, will be cold comfort for many across the border, since both Mexico and Canada are already facing the prospect of recessions induced by Trump’s policies.

While there are methods to quantify nontariff barriers, the numbers displayed by Trump are by all appearances made up. It seems that what is claimed to be the tariff rate imposed on the United States by, say, Vietnam is simply the approximate fraction of the US deficit with Vietnam ($123.5 billion in 2024) over the value of Vietnamese exports to the United States ($142.4 billion in 2024). This rounds up to just under 90 percent. This odd math explains some of the bizarre inclusions.

The tiny French overseas territory of Réunion, an island in the Indian Ocean, is unlikely to be responsible for the erosion of the US manufacturing base. The barren Antarctic Heard Island and McDonald Islands, a territory of Australia, is populated only by penguins. Israel, which does not impose any formal tariffs on the United States, is not spared a reciprocal rate of 33 percent. Some have speculated that the Trump administration used ChatGPT to arrive at a method for calculating the appropriate rate of tariff to levy on other countries. It is not impossible that America’s world-historical effort to take control of its destiny was devised impromptu by the teenage computer scientists Elon Musk introduced to the executive.

While the methodology seems to be bogus, the economic consequences of the measures, set to come into effect on April 5 and 9 for the baseline and reciprocal tariffs, respectively, are very real. By all accounts, they portend a massive stagflationary shock, that is an inflationary surge in concert with a blow to economic activity, both via higher import prices and their effect on consumption and production within the United States. The Federal Reserve’s eventual response would only add to this picture.

Trump claimed that the new tariffs will “ultimately bring down prices for consumers.” But the operative word here is “ultimately.” By any account, the immediate burden will be borne by American households, already struggling with high debt and rising living costs. The market for consumer goods, due to its exposure to the process of global trade integration, had long provided a deflationary reprieve to consumers who faced steep inflation in services like education and health care, and in non-tradable goods like housing and restaurant food.

If the Trump administration makes good on its “liberation,” this is set to end. By way of an example: the cumulative tariffs’ burden on China is set to be 54 percent (consisting, as mentioned above, of the 20 percent already levied and the new “reciprocal” 34 percent rate). This would mark up the average iPhone by up to $220, assuming import price of $500 for Apple.

It is not likely that Apple’s efforts to relocate some of their production to India will help in the short term. Nor is it likely that firms whose imports are affected by the tariffs, will eat most of the cost. Apple in particular seems to have been hit across their entire supply chain. As was the case with the barriers previously introduced under Trump and Joe Biden, the incidence of what amounts to a sales tax fell squarely on US households. What this tariff blitz amounts to is a large sales tax on the working and middle classes, ostensibly to fund tax cuts for the well-off.

This will of course apply to all consumer electronics, over 90 percent of which are produced in China’s Pearl River Delta or undergo final assembly in Vietnam, which has also been hit heavily by tariffs. The same is true for all electronic goods or components produced in China and not already subject to sectoral tariffs. These will all get vastly more expensive. As will most other goods with supply chains in Asia, such as footwear, clothing, furniture, etc. And while some key goods, such as semiconductors and pharmaceuticals, are, for now, exempt, it is not clear how Trump’s efforts are supposed to herald a new age of US manufacturing.

There is some speculation that these measures will be short-lived. Either they will be undone by Congress, or they will be whittled away with concessions. Trump’s propensity for making deals with countries is well established. But this does not rhyme with everything that the US president has ever said about the “foreign cheaters and scavengers” who are supposed to have plundered America.

If anything, Trump has been consistent in his stance on trade since the 1980s, when Japanese (and to a lesser extent German) surpluses with the United States were the focus of his ire. He has been consistent in his (false) belief that bilateral trade is what determines the US trade balance, and that (as is equally false) bilateral deficits are “subsidies” to surplus countries. His belief that tariffs are a remedy for “unfair” trade is misguided.

But these moves are not the ravings of a power-crazed madman. They have emerged out of an internally coherent and consistent strain of thinking within American policy circles stretching back at least into the 1990s. This should give pause to anyone looking to dismiss Trump’s actions as thoughtless.

Whatever its demerits, his actions are a response to a particular, albeit wrong, understanding of what is wrong with the global order and the US economy’s position within it. However hard it may seem after yesterday’s spectacle, it is time for critics of the current administration to start taking Trump seriously.