In its pursuit of an "America First" agenda, the US government has rolled out aggressive tariff measures—from fentanyl-related levies to Section 232 and "reciprocal" duties. While these actions may score political points in the short run, they risk deeper economic wounds down the line.
Growth on the chopping block
Economists warn that newly proposed reciprocal tariffs could shave off as much as 3.84% of real GDP over the next three to five years. At 2024’s GDP levels, that translates into a cumulative loss of about $1.07 trillion. If trading partners retaliate, the hit could be even steeper.
Competitive edge blunted
US firms rely heavily on imported raw materials and components to keep production costs in check. High tariffs drive up import bills, squeezing profit margins. Companies may pass costs to consumers through higher prices—eroding purchasing power—or slash expenses via layoffs, undermining employee welfare and social stability. Over time, these pressures chip away at the global competitiveness of US businesses.
The fallout extends beyond the bottom line. Higher consumer prices can fuel inflation, while rising business costs may deter investment. For a country that has built much of its success on open markets and integrated supply chains, the new tariff frontier could end up taxing America itself.
As global trade tensions simmer, the key question remains: will the short-term political gains outweigh the long-term economic pain? For US policymakers and businesses alike, the challenge will be finding the right balance between protecting domestic interests and preserving growth.
Reference(s):
cgtn.com
