Trump’s tariff tactics carry higher economic risks than during his first term

When Donald Trump started the biggest trade war since the 1930s in his first term, his impulsive combination of threats and import taxes on U.S. Trading partners created chaos, generated drama — and drew criticism from mainstream economists who favor free trade.But it didn’t do much damage to the U.S. economy. Or much good. Inflation stayed under control. The economy kept growing as it had before. And America’s massive trade deficits, the main target of Trump’s ire, proved resistant to his rhetoric and his tariffs: Already big, they got bigger.The trade war sequel that Trump has planned for his second term – if it unfolds the way he’s described it – would likely be a different matter altogether. Trump appears to have grander ambitions and is operating in a far more treacherous economic environment this time.His plans to plaster tariffs of 25% on goods from Mexico and Canada and 10% on China – and to follow those up by targeting the European Union – would threaten growth, and push up prices in the United States, undermining his campaign pledge to eliminate the inflation that plagued President Joe Biden.The tariffs would be paid by the U.S. importers, who would then try to pass along the higher costs to consumers through higher prices.Trump himself has warned of possible fallout. WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump said in a social media post Sunday. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”For now, some of the hostilities are on hold. Trump on Monday paused the tariffs on Canada and Mexico for 30 days to allow more negotiations after those countries agreed to do more to stop the flow of illegal drugs and undocumented workers into the United States.But he went ahead with the 10% tariffs on China Tuesday. Beijing promptly retaliated by imposing tariffs on U.S. products, including coal and big cars. It also is restricting exports of critical minerals and launching an antitrust investigation into Google.