The ongoing tariff saga continues to perplex businesses and investors alike as President Trump recently announced a 90-day pause on reciprocal tariffs, dubbed ‘Liberation Day,’ that would affect all countries except China.
This unexpected halt has stirred a sense of relief in the markets, especially amid rising yields on 10-year and 30-year Treasury bonds, which may have prompted the administration to reconsider its aggressive tariffs.
The U.S. economy, once a pillar of stability in the global landscape, now appears to be a source of risk and uncertainty, as fluctuating tariffs create instability and unpredictability for businesses and consumers alike.
While the temporary suspension of tariffs is a welcome development, it merely opens a narrow window for negotiations.
Nonetheless, a significant number of tariffs remain in effect for several allied countries, while tariffs on Chinese goods continue to be much higher than before.
Retaliatory measures by both China and Canada have already taken effect, plunging the U.S. deeper into a multi-front trade war that is largely self-inflicted.
As a consequence, American consumers are beginning to feel the weight of these import taxes, which may affect the prices of various goods in the market.
Reflecting on the recent developments, one can’t help but draw parallels to the economic policies of the past.
The era marked by leaders such as Ronald Reagan and Margaret Thatcher saw the establishment of a neoliberal order, built on a global trading system that had been carefully negotiated over several generations.
This framework was predicated on the understanding that open and competitive markets, along with cross-border trade and investment, could catalyze wealth creation and growth.
It also embraced the principle that economic integration—despite its flaws—was preferable to the ‘beggar thy neighbor’ policies that had previously led to economic wars and potential military conflicts.
For decades, this paradigm guided policymaking in the United States and beyond, presenting a solution to the challenges of the economic landscape.
During my time as a graduate student, I found the neoclassical economic framework both analytically clear and frustratingly rigid, often neglecting the intricate realities of how the world functions.
Over time, I learned that successful economic policy is a blend of both engineering and art, requiring not just a technical understanding of markets but also genuine empathy for the individuals who navigate them.
This, perhaps, highlights a significant failing in the approach of policymakers over the last generation; the full costs of economic reforms wrought by global trade, technological advancements, or exploitative practices by nations like China were largely overlooked.
As a result, the grievances of the so-called ‘forgotten men and women’ have increasingly found traction and expression within the political arena, culminating in a dramatic shift during the 2016 presidential election and those that followed.
In his book, ‘The Revolt of the Elites,’ historian Christopher Lasch offered keen insights 30 years ago, warning of the growing divide between policy elites and the general populace, alongside the diminishing sense of reciprocal obligation that characterized earlier periods.
He rightly anticipated the populist surge that would upend the traditional political establishment in the U.S.
As we reflect on this phenomenon, it is crucial to note that while populism excels at articulating the challenges faced by many, it often struggles to deliver effective economic solutions and positive outcomes.
As it stands, the current administration’s erratic tariff strategy seems to be following this same uneventful trajectory, generating chaos in global markets without presenting viable alternatives.
As we move forward, one can only hope for a timely circuit breaker that averts a significant economic policy disaster just three months into the administration’s term.
Ultimately, the future of Trump’s economic strategy hinges on which of two opposing impulses will shape policy in the upcoming weeks and months.
image source from：https://www.csis.org/analysis/partial-pause-tariffs-will-united-states-choose-innovation-instead
