The return of Donald Trump to the White House has brought with it market chaos, trade wars and economic anxiety. International diplomacy has been turned upside down as the US rethinks decades of alliances, while the global trading system has been jolted by unprecedented tariffs. To mark the first 100 days of Trump’s second term on Wednesday we asked readers to share their questions, to be answered by our experts. The questions below may have been lightly edited for sense and some of the names withheld at the request of the correspondent. We start with three trade questions.
The Port of Los Angeles © Bloomberg
Can you quantify the change in tariffs from pre-inauguration to April 2 and will we ever reach some sort of steady state of tariffs? Craig Ivey, Jacksonville, Florida, and Maximo Fenn, Cambridge, Massachusetts.
Alan Beattie, our senior trade writer, says: Working out how big the tariffs are is hard enough, guessing how long they will last even harder. The latest estimates I have seen are from Fitch Ratings, which puts the average US tariff on all imports at 23 per cent, 10 times its level last year. Given that the so-called “reciprocal” tariffs on most countries which were announced on April 2 were subsequently suspended for 90 days, this figure overwhelmingly reflects steep tariffs on goods from China, in excess of 100 per cent.
But within the overall averages there’s a ferociously complicated pattern. Trump inherited some sector-specific tariffs such as steel and aluminium from Joe Biden and wants to add more on pharmaceuticals, lumber and semiconductors. He has also granted supposedly temporary reprieves for various tech products. It’s not just the layperson who’s confused.
No one knows where they will end up, but the impact of movements in financial markets is likely to be important. Trump suspended most of the April 2 announcements a week later in response to falls in US stock and bond prices as well as the dollar, and I suspect he’s going to want to negotiate them down and declare victory to prevent total market meltdown.
Even if deals are reached on tariffs, is there a danger, particularly from America’s allies, of both corporates and individuals, choosing not to do business with American companies or buy American products (so an informal goods and services boycott, to some extent)? If so, what do you think looks most vulnerable in the US and how big could the damage be? James.
Alan answers: Actual out-and-out boycotts I suspect will be strongest in the case of products very closely associated with Donald Trump himself, especially Tesla, run by his close adviser Elon Musk, or goods which are symbolically American. Canadian consumer and official boycotts of US spirits would fall into this category.
Of course, one of the other very obvious effects we’re seeing already is a precipitous drop-off in tourists visiting the US. As it happens that’s not directly connected to tariffs as such but more to do with the security risks of crossing the US border. I suspect the problems with tourism (and business travel) will persist for a long time. Trump might lift the tariffs but his extraordinary actions on immigration and indeed deporting US citizens don’t look like the kind of thing he will draw back from.
I suspect companies outside the US that have a long-standing sourcing relationship with the country will be slower to switch. But they will be alert for their own governments putting on retaliatory measures against imports from the US, and at the very least will be looking to diversify and make contingency plans for an escalation of trade conflict.
Go deeper: For more on trade, Tim Harford wrote a very clear piece on why increasing tariffs was an “act of foolishness”.
Elon Musk’s so-called Department of Government Efficiency was tasked with cutting federal spending by $2tn © REUTERS
Can you explain (in short summary) what really needs to be done to drastically reduce the budget deficit and hopefully halt or decrease national debt? Oskar Kudla, Houston.
Claire Jones, our US economics editor, says: The US’s public finances are in a mess, with federal deficits set to run at about 6 per cent of GDP over the next decade, according to projections from the Congressional Budget Office, lawmakers’ fiscal watchdog.
Workable solutions are hard to find.
Elon Musk’s so-called Department of Government Efficiency was initially tasked with shaving $2tn — or almost a third — off federal spending. In fact, it has managed to cut just a sliver of that so far.
The new administration claims that the revenue from Donald Trump’s trade tariffs will more than cover the cost of plans to make 2017 income and corporate tax cuts permanent. Those tax cuts, in turn, will boost growth, improving federal debt-to-GDP ratios in the process. Many economists say the sums don’t add up. Indeed the tax plans threaten to stretch deficits even further.
So what’s really needed to improve the health of the US’s public finances? Hard choices. The CBO itself has presented a series of unglamorous, vote-losing options — such as raising the retirement age and cutting some veterans’ benefits.
With the US population ageing, what it may ultimately come down to is reining in spending on health.
Trillions were wiped from stock market valuations earlier this month © AP
If every former ally, now turned adversary at the stroke of a Sharpie, were to jointly dump Treasury bills, what would that do to the global economy? Trevor from Canada.
Markets columnist Katie Martin says: I doubt it would be pretty. Officials around Trump suggest they understand very well that financial, diplomatic, economic and military might are all closely intertwined. So it is odd that they have knocked away some legs of this stool and expect unquestioning global demand for US government bonds to continue for ever.
This is how the world has worked in the past 50 years or so, but the decline in the dollar and conspicuous lack of a jump on government bond prices since Trump came back to office, suggest this old framework is faltering.
The biggies here are Japan, with around $1tn in US debt on its books, and China, with about three-quarters of that.
If they were to sell up, yields would shoot higher, cranking up borrowing costs for the government, businesses and individuals. The US is still the biggest economy on earth, so if that led the US into recession, the rest of the world would feel the pain too.
It’s important to remember this can happen with a whimper, not necessarily a bang. They don’t have to sell US assets, just stop accumulating them. Either way, the pain is potentially great, especially in the US but also overseas. Testing investors’ patience is a very high-stakes gamble.
A girl takes a photo of her friend outside a soon-to-be-opened Apple store in New Delhi in 2023 © REUTERS
We’ve already seen Apple shift some of its iPhone production from China to India. So can Modi strike a trade deal with Trump? Could India be the China of the early 2000s? Carson Marsh, San Diego, California.
Chris Kay in Mumbai says: There’s certainly been encouraging momentum for India and Trump’s trade attack on China could accelerate a trend that was partially under way. Some multinationals, like Apple, were already shifting some manufacturing to India. New Delhi has also been on the front foot in trying to appease the American president and veteran trade negotiators note that India is acting with unusual haste in attempting to close deals, not just with the US, but also other countries such as the UK.
But there are still considerable obstacles for India to reach even a fraction of the scale of China’s factory firepower. There are perennial bottlenecks that strangle a wider scale-up. Bureaucratic red tape, arbitrary corporate tax attacks, as well as the sub-par quality of blue-collar labour and infrastructure remain considerable challenges, despite notable efforts by Prime Minister Narendra Modi to remove impediments to investment over recent years. Some economists also believe India may have missed the manufacturing boat. Many companies have already diversified supply chains through south-east Asia, particularly Vietnam, which offers more reliable infrastructure and a business-friendly environment.
JD Vance and his wife visited a US army base in Greenland earlier this month © Jim Watson/AFP/Getty Images
In these first 100 days, who have emerged as the three most likely candidates to succeed Trump from both sides? Timothy R from New York City.
Edward Luce, US national editor, says: On the Republican side, JD Vance has to be the favourite. As I wrote last week he has become Trump’s very effective troller-in-chief. But given Trump’s overt aim to stay in power as long as possible, gaming out a post-Trump Republican field is tricky. I wouldn’t rule out Donald Jnr, or Lara Trump, if Trump wants to keep it in the family. I am inclined — but without conviction — to dismiss the possibility that Trump could somehow suspend the 22nd amendment and run for a third term.
On the Democratic side, the field is already large and growing. The governors are more interesting than the senators — especially Pennsylvania’s Josh Shapiro and Illinois’s J.P. Pritzker. Also watch Maryland’s Wes Moore. California’s Gavin Newsom has made too many flip-flops recently though he remains ambitious. Michigan’s Gretchen Whitmer also slipped up in partially endorsing Trump’s global tariff war, which qualifies as electoral malpractice. Her star has fallen. In these circumstances you cannot rule out someone outside of politics suddenly emerging, such as Mark Cuban.
The war in Ukraine has forced European leaders to combine military spending © Reuters
How do you assess the chances that Europe, besides reinforcing its economy and its technology, and paying for its own defence, might move towards political union, becoming a true geopolitical entity? Eugenio Bregolat, Seu d´Urgell, in the Pyrenees, northern Spain.
Henry Foy, Brussels bureau chief, says: The chances of Europe becoming a cohesive geopolitical entity hinge less on aspiration than on alignment — of political interests, threats, and leadership. The EU’s evolution is less a grand design than a series of pragmatic leaps, each born of crisis-driven necessity, forcing leaders to abandon previous red lines. The financial crash birthed the banking union; the Covid-19 pandemic unlocked joint debt issuance; war on its border forced joint arms financing.
Facing an adversarial Washington, a revanchist Moscow and an emboldened Beijing, Brussels is again testing its limits. Ursula von der Leyen’s European Commission speaks the language of power, and Berlin now echoes Paris’s spirit of strategic autonomy. Economic and defence integration is advancing — Mario Draghi’s competitiveness report provides both stark diagnosis and tangible remedies. But Europe remains a mosaic, and political union requires more than shared budgets; it demands shared risk, shared sovereignty. The Ukraine war jolted Europe awake, but uneven responses to China, US trade pressure, and the Middle East reveal persistent fractures and a continent still more collegiate than federal. Donald Trump may force Europe to act together on specific issues out of necessity. But becoming a truly unified geopolitical actor remains a vision — potent and compelling, but far from realisation.
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