Trump’s tariffs bite

Trump shows that he doesn’t always chicken out on trade, with the New York Times reporting on higher US tariffs on steel and aluminum imports and their extension to home appliances.

The OECD downgrades global growth from 3.3% in 2024 to 2.9% in 2025 and 2026 writes the New York Times, and the Financial Times reports on the World Bank’s warning that trade wars will weigh on two-thirds of developing countries. The Congressional Budget Office expects that Trump’s tariffs will reduce primary fiscal deficits while decreasing the size of the US economy.

Jason Furman ponders whether Trump’s tariffs are trying to solve a problem that doesn’t exist.

Mentioned publications

Higher U.S. Tariffs on Steel and Aluminum Imports Take Effect – Ana Swanson and Ian Austen, The New York Times, June 4, 2025
The Trump administration raised tariffs on steel and aluminum imports from 25% to 50% citing national security and aiming to boost the domestic steel mills and aluminum smelters. Key trading partners like Canada and Mexico criticized the move and warned retaliation. US companies also criticize the tariffs saying it would increase the cost for American consumers.
Trump Steel Tariffs Expanded to Hit Home Appliances – Ana Swanson and Alan Rappeport, The New York Times, June 12, 2025
The US Commerce Department announced that the 50% tariffs will apply to steel derivative products, including common household appliances such as washing machines and refrigerators. The move aims to protect US appliance manufacturers from cheaper foreign competitors, but risk raising costs for American consumers.
Trump’s Tariffs Expected to Drag Down the Global Economy – Melissa Eddy, The New York Times, June 3, 2025
President Trump’s trade war is expected to slow growth in most of the world’s leading economies including the US. The OECD cut its 2025 global growth forecast from 3.3% to 2.9%, citing trade tensions driven by Trump’s tariff policies as a major drag on the global economy. US economic growth is projected to slow to 1.6% in 2025 and 1.5% in 2026. The OECD urged world leaders to cooperatively resolve global trade issues.
- OECD Economic Outlook, Volume 2025 Issue 1 – OECD, June 3, 2025

HF sponsored accessTrade wars to weigh on two-thirds of developing countries, World Bank warns – Financial Times, June 10, 2025
The US driven global trade war is expected to reduce growth in nearly two-thirds of developing economies, with forecasts falling from 4.2% to 3.8% in 2025. Likewise, global trade growth in goods and services is also set to slow sharply to 1.8%. The World Bank urges global cooperation to restore a more stable global trade environment and support vulnerable economies.
- Global Economic Prospects – World Bank Group, June 2025

Budgetary and Economic Effects of Increases in Tariffs Implemented Between January 6 and May 13, 2025 – Congressional Budget Office, June 4, 2025
The Congressional Budget Office estimates new tariffs (as of May 13, 2025) would reduce total federal deficits by $2.8 trillion through 2035. Despite fiscal gains, the tariffs are expected to shrink US real GDP due to lower investment and productivity, along with retaliatory tariffs from other countries. The tariffs will raise inflation by an average of 0.4 percentage points in 2025 and 2026, eroding household and business purchasing power.
Are Trump’s Tariffs Trying to Solve a Problem That Doesn’t Exist? - David Leonhardt and Jason Furman (Opinion), The New York Times, May 12, 2025
Trade significantly benefits US living standards—especially for low- and middle-income households—by lowering consumer prices and supporting better domestic jobs. However, trade does create localized harm, especially in manufacturing communities, though this impact is often overstated. Trump’s tariffs are expected to raise inflation and reduce both imports and exports, making the US less globally integrated. The long-term risk is that protectionism becomes the new normal.