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'The Economist' editor unpacks the 'biggest trade policy shock' of Trump's tariffs
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President Trump's sweeping "Liberation Day" tariffs have upended the global economy, sending stock markets into turmoil.
"This is, without a doubt, the biggest trade policy shock, I think, in history," Zanny Minton Beddoes, the editor-in-chief of The Economist, says.
Trump last week ordered a minimum 10% tax on nearly everything the U.S. buys from other countries. He's also ordered much higher levies on things the country buys from China, Japan and the European Union. However, a lot of those tariffs are in flux, because almost each day the president has either increased some tariffs or paused others.
"Presidents from Reagan to President Biden have increased tariffs on individual goods or individual sectors, but nothing like this. So this is off the charts in terms of scale, ... speed and uncertainty," says Minton Beddoes, who is a former economist for the International Monetary Fund.
While the motivation behind the tariffs remains unclear, she says that the Trump administration could be seeking to "radically remake the rules of global security, geopolitics, economics."
Minton Beddoes says the president seems to believe that the U.S. is getting a bad deal in the global economy, and that the tariffs will be used as a tool to renegotiate trade agreements: "It might be exactly what President Trump loves. Lots of people coming, knocking on his door, fawning, hoping for a good deal. This is The Art of the Deal on steroids," she says.
But, Minton Beddoes adds, the economic turmoil caused by the tariffs creates "a lot uncertainty, and a lot pain for consumers because tariffs are taxes on consumers. The people who pay this in the end, the cost of the tariffs, are people who pay more for the things that they buy."
"I think we've crossed some kind of a Rubicon in the last week or so, and we're not going to go back to the world as it was before," she says. "People, I think, are increasingly looking at the U.S. not as the shining city on the hill, a place which we all aspired to and certainly held in very high regard, but increasingly, it's a sort of bullying, swaggering, selfish, transactional country."
Interview highlights
On if the tariffs are to re-industrialize America, or if they're a negotiating tool
[Trump] has two views, and it's not quite clear which of them is predominant. But one view is that if you look at the United States over the last 30 years, he thinks that the U.S. manufacturing base has been hollowed out. And the U.S. has suffered because of unfair trade practices from other countries and that you need tariffs to re-industrialize the United States and that this permanently would mean that behind a tariff wall you would encourage companies to invest in the United State to create U.S. jobs and that therefore the U.S. would fundamentally be better off if it permanently had high tariffs. That's kind of one potential view.
The other view is that he actually views these tariffs as negotiating tools, to get better deals with other countries, and that by threatening, then you negotiate a better deal with the other countries. There could be truth to both of those, but it's not clear what is actually driving President Trump, whether he primarily wants to have a kind of 19th-century view, where the U.S., in his view, prospered behind a high tariff wall. ... It's a very sort of radical shift back to an era where the U.S. was much less wealthy and successful than it is now.
On the idea that tariffs will bring manufacturing back to the U.S.
The administration's logic is we want more things to be built and produced in the United States. We want manufacturing back so we can create the kind of jobs that existed in the middle of the 20th century. And so we are going to have high tariffs, which will encourage companies to come and invest and produce in America. And another way of encouraging [companies] to do that is that we'll offer lower taxes. And for American consumers, we'll get more revenue from tariffs so we can lower other kinds of taxes. That's what you hear from administration officials. …
The question for U.S. consumers, and indeed for the U.S. economy, is to say: Has the U.S. economy overall really been hurt by the current system? My answer would be no, it hasn't. It's the richest, most successful economy in the world. U.S. consumers have an extraordinary range of choice. They are better off from the competitive environment that comes from a low-tariff economy.
If tariffs are raised, consumers pay more. U.S. companies have higher costs. That's why you see this incredible turmoil in the stock market right now. I don't think you end up with a system where the U.S. is better off. Nobody gains from a tariff war. And the other part of this is that countries will retaliate. We've already seen China announcing retaliation. I think others will retaliate too. And so you end up with a situation which is really lose-lose. And the goal of it is one that I think is not only unattainable, is not really advisable. We're in 2025, the U.S.'s strengths are in high tech, the U.S.'s strengths are in services, the U.S.'s strengths are not in going back to making garments, into sewing sneakers. That's not what the U.S. economy is at, and trying to force it back through tariffs, I think is a very damaging and dangerous direction to go in.
On what a tariff war with China might look like
The impact of all of this is that tariffs on Chinese goods coming into the U.S. will, I think, be somewhere in the order north of 100%. The knock-on effect of this, now China is more dependent on the United States for its exports than vice versa, so it will suffer more, but it can retaliate. ... If we really get into a kind of economic war, then, for example, Apple produces a huge number of its phones in China, which are now going to be hit by these tariffs, but China could put all kinds of restrictions on Apple, China could put restrictions on all kinds other kinds of critical minerals that it exports. You can get into a very nasty tit-for-tat economic battle from which nobody wins. And it becomes quite hard to get out of because there is sort of political pride and national pride in this. ... And so it's a very, very dangerous dynamic.
On an opportunity opening for China
The United States, by imposing tariffs on everybody, friends and foes alike, is undermining, I think, one of the core aspects of its strength, which is its alliance system and the fact that it does have very strong relations with a large number of countries. And it has the reputation of being the country that sort of set up and upheld this system of global trade and security rules. Whereas now it seems to be turning its back on that. And that is an opportunity geopolitically for China.
Monique Nazareth and Anna Bauman produced and edited this interview for broadcast. Bridget Bentz and Molly Seavy-Nesper adapted it for the web.
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