TEHRAN - In a commentary on April 18, The Times newspaper likened Donald Trumps sweeping tariffs on countries, especially on China, as devastating as the COVID-19 pandemic that greatly harmed the global economy.Trump is the biggest source of uncertainty since COVID-19, the newspaper said.Following is an excerpt of the article:It is five years since the world economy suffered a devastating shock caused by the COVID-19 pandemic.
You may think the analogy strange, but we are marking the fifth anniversary of the COVID-19 pandemic with a very similar shock to the world economy, which is manifesting itself in very similar ways.The number of passengers flying to the U.S.
from abroad has plunged.
Ships full of goods bound for America have been halted.
All over the U.S., companies will soon start to raise prices and shed employees.
But the cause of this new shock is not a coronavirus, but a mind virus.The mind virus is President Trumps belief that, by raising the average U.S.
tariff rate by a factor of roughly ten, he can make America great again, restoring manufacturing employment to where it was back in, say, 1972.
I am on the record as calling this the economics of Minecraft.The millions of Americans who voted for Trump, whether they knew it or not, voted for a radical change in American trade policy.
Trump had tried and failed to deliver this in his first term.
He explicitly campaigned as Tariff Man in 2024, citing President William McKinley, an arch-protectionist, as his role model, and promising a Reciprocal Trade Act.Having won re-election by a wider margin than pollsters had predicted, Trump concluded that he had a mandate to turn the economic clock back all the way to about 1909 and to impose tariffs at far higher levels than we have known in our lifetimes.In 2020, COVID-19 spread through the global social networks connected by the worlds airports and permanently altered those networks.
Today, Donald-25 is having the same effect on the networks we call supply chains.
In 2020, the rest of the world responded to the pandemic by using fiscal and monetary stimulus to offset the shock.
Now, in response to the American mind virus, the rest of the world is forced to do the same.It was recent travel statistics that first stirred half-buried memories of COVID.
According to the International Trade Administration, the number of visitors from Western Europe who stayed at least one night in the U.S.
fell by 17 percent in March compared with a year ago.
For some countries, the volume of travel fell by more than a fifth.
There has been a surge of flight cancellations by Canadian, French and German travelers.
Indeed, Canadian reservations for flights to the U.S.
are down 70 percent.Of course, these are responses not so much to Trumps tariffs as to his generally abrasive treatment of American allies, not least his inflammatory claim that Canada should become the 51st state, and his vice-president JD Vances roughing up of Europeans at the Munich Security Conference in February.
Foreigners read news stories about non-citizens being deported from the US to El Salvador; such stories are off-putting.Yet the pandemic-like behavior of the world economy has more to do with tariffs than anything else.
Already, the volume of goods coming into the port of Los Angeles is down steeply.
Daily container bookings in the US-China trade route have tumbled by a quarter since the end of March relative to this time last year.On the East Coast, the latest New York Federal Reserves Empire Survey points to a slump in business expectations even steeper than in early 2020.
And measures of US and global policy uncertainty clearly show that Trump is the biggest source of uncertainty since COVID-19.This time five years ago, no one was certain what the infection fatality rate of COVID was.
The recommendation of someone with a name similar to mine that we should lock down our social and economic lives resulted in a sudden stop in a huge proportion of human activities.The equivalent uncertainty in 2025 is that no one knows where U.S.
tariffs will be tomorrow, much less in three months time.
The result is a lockdown of a large part of the trade between the two largest economies in the world.
Like the pandemic, this implies a huge hit to the world economy as a whole.JPMorgan said last Wednesday that it is now more likely than not that the U.S.
economy will shrink later this year.
On top of recession fears, we narrowly avoided a full-scale financial disaster in the U.S.
bond market on April 9, much like in mid-March 2020, when the Federal Reserve had to step in to mitigate a fire-sale of assets by funds scrambling to raise cash.To appreciate why Trumps trade policy is proving almost as economically disruptive as a pandemic, its important to put the tariffs he has imposed since his inauguration into historical perspective.
The average US tariff rate trended down from the 1940s until the 2010s, reaching an all-time low of 1.27 per cent in 2008.The average from the year I was born (1964) until then was 3.67 percent.
In the wake of Trumps Liberation Day, and even after two significant steps back, the figure is now above 20 percent, according to Bloomberg Economics roughly ten times the average tariff rate last year.This represents more than just a huge tax hike on Americans.
It is as if the U.S.
has imposed economic sanctions on itself.
This is because the most radical part of Trumps trade war consists of tariffs on China that are now so high, no one is quite sure what the cumulative rate is.
(The White House said on Tuesday that its 245 percent.
The Chinese Foreign Ministry questioned its arithmetic.) Even after the exemptions on smartphones, laptop computers, hard drives, computer processors, and memory chips stealthily announced eight days ago this amounts in effect to a prohibition on importing a very wide range of goods that American companies and consumers have grown accustomed to sourcing from China.To illustrate the point, here are some of the categories of products for which between a third and three quarters of U.S.
imports were from China in 2023: in descending order, Christmas and other festive goods, toys, plastic household articles, games, electromechanical domestic appliances, lamps, rubber or plastic footwear, sports equipment, electric heaters, womens suits (knit), batteries, house linen And thats just the top dozen.
Its essentially the contents of every Target store in America.Tripling the price of all these things is a supply shock comparable in its scale with the energy crisis of the 1970s with the difference that the oil price hike was forced on American consumers by Arab governments, whereas this is being imposed by their own government..
This article first appeared/also appeared in Tehran Times