President Trump’s “Liberation Day” announcement of sweeping import tariffs has caused stock markets to plummet, prompted warnings of global recession and has been described as marking the end of globalisation. However, Adrian Ashurst, CEO of Worldbox Intelligence, argues that there are good reasons to believe the announcement was simply designed to force other countries to bring down their tariffs.
President Trump’s new tariff regime announced on April 2nd has understandably stunned financial markets, as well as governments and businesses around the world. Many analysts believe Trump’s policies make little sense. The administration certainly appears to have given little thought to the calculations behind the new tariffs. For each country, the White House divided America’s trade in goods deficit for 2024 by the total value of imports. Trump, being “kind”, then halved that figure. Take the calculation for China:
- Goods trade deficit: $291.9bn
- Total goods imports: $438.9bn
- Those figures divided = 0.67, or 67%
- And halved = 34%
Hence, the US applied a 34% tariff to China on top of the existing 20% tariff. That ‘back of an envelope’ methodology has produced some bizarre results such as a 49% Cambodian tariff, and rates of 48% for Laos and 46% for Vietnam. Yet these countries have large trade surpluses with the US because they are poor and consumers can’t afford to buy most US goods.
Countries such as Vietnam have also become part of the global supply chain for major manufacturers, including US tech and clothing companies such as Nike, Intel, and Apple. The US, if anything, encouraged offshoring in countries like Vietnam to lessen dependence on China-based supply chains.
Moreover, hammering poor Southeast Asian countries makes little strategic sense. The US has clearly stated that its main foreign policy priority is to contain China. That would include its growing influence in Southeast Asia. Yet impoverishing Vietnam et al will simply drive those countries to seek closer economic ties with China.
Is there a plan?
So, what is going on? Are Trump and his administration, simply ideologues who fail to understand the basics of economics, or do they have a strategy? Perhaps it is worth considering the second possibility. There are many clues that suggest Trump does indeed have a roadmap and that the tariff announcement was designed to overwhelm and terrify trade partners to come to the negotiating table, part of Trump’s overall ‘shock and awe’ approach to talks.
Many of his senior advisers in the run up to and in the aftermath of the tariff announcement, for example, have said that the end-goal is lower tariffs globally and that the US is determined to pursue a policy of fair trade as well as free trade. Sebastian Gorka, the president’s deputy assistant, for example says the US wants “great trade relations with every country and that the tariffs are just a starting point.”1
Gorka adds that the policy is very simple, explaining that “if you don’t discriminate against US goods, we won’t discriminate against you.” Gorka insisted that the tariffs do not represent the launch of a trade war, rather that the US government is seeking to establish equitable trade relations for every country.
Meanwhile, Trump has warned countries not to respond with counter tariffs. If they do, the president, has said, Washington will hike its tariffs even higher. China has refused to play by Trump’s rules, retaliating with its own counter tariffs. According to the Wall Street Journal, Beijing has been reaching out to the Trump administration since it took office in January and has been rebuffed at every stage.2 That suggests Trump will take a much harder stance with China than other countries with the aim of maximising concessions from Beijing.
Overall, however, the policy of forcing countries to renegotiate trade terms seems to be working. On April 6th, just four days after the tariff announcement, more than 50 countries had signalled to the White House that they want to start trade negotiations, according to Kevin Hassett, Trump’s economic adviser.3
Tariffs to fade away by mid-summer?
Carlos Gutierrez, who served as commerce secretary under President George W Bush, also believes the tariffs are an opening step in an ambitious negotiating process. He believes that they are unlikely to still be in place in two months’ time and definitely won’t be around in the second half of the year.
Gutierrez divides the tariffs into various categories. On autos he says that the tariffs on Mexican and Canadian autos are likely to be resolved when the negotiations on the free trade agreement between the USA, Mexico and Canada takes place.
Comprehensive trade negotiations between Canada and the US are due to take place following the Canadian election on April 28 although it is as yet unclear whether Mexico will be involved. He also saw quick fixes to the tariffs on EU autos. Gutierrez explained that the EU levies a 10% tariff on US autos, while the US levies 2.5%, a discrepancy that “can easily be fixed.”
Gutierrez adds that the imposition of the alarmingly high reciprocal tariffs are designed to force a negotiation. He explains that “the president will be looking for victories and with this number of countries involved,4 he will have a slew of victories.” However, he regards China as a special category and that the outcome is hard to predict, adding that “it could be a trade deal or something much bigger.”
Finally, Gutierrez believes that the 10% standard tariff could be retained. That view has been confirmed by Trump administration officials, according to the Wall Street Journal.5 However, Gutierrez says that if companies know for certain that the 10% tariff is here to stay, they can easily make adjustments and, if they are looking forward over a 10-year horizon, will be able to decide if it is worth building a plant in the US. It is also worth noting that the dollar routinely swings in value by 10% and more against many currencies, with exporters able to absorb the move. Over the past year, for example, the dollar has swung from a low of 0.89 to the euro to a high of 0.98.6
A useful stick?
It is also worth noting that Trump sees tariffs as a more useful diplomatic tool than sanctions that can be used to wring concessions from other countries, according to Trump’s treasury secretary Scott Bessent.7 For example, Trump delayed tariffs on Mexico and Canada for a month after their governments agreed to step up efforts to address illegal migration and drug trafficking at the US border.
Yanis Varoufakis, economist and a former Greek finance minister believes the tariffs could also be used to drive another of Trump’s long-term ambitions, namely to devalue the dollar by around 40% and boost US competitiveness. Varoufakis has said the US government could demand that the likes of China, the EU and Japan dump their dollar holdings to secure a trade deal.8
Political pressures
There is another very important reason why the tariffs announced on 2nd April are unlikely to be in place long term. If they remain, they will inevitably raise inflation and Trump campaigned on a pledge to contain the price rises that are hurting so many Americans. Moreover, the stock market is unlikely to rebound unless and until those tariffs are removed. Americans are far more exposed to movements in US stocks than their counterparts in other countries. That’s because many hold 401k retirement plans that are invested in equities.
Already, just four in 10 voters view Trump’s handling of the economy and trade favourably, according to poll conducted in late March even before the tariff announcement caused stocks to slump and recession fears to spike. Trump also knows that he doesn’t have much time to bring American voters back into the Maga fold. In November 2026, Americans go back to the polls in key mid-term elections.
The president can’t afford to plunge the US into a Trump recession, a prolonged stock market downturn or inflict anything other than a very short bout of inflation on voters. Prominent Republicans are already concerned about that vote. The Texas senator, Ted Cruz has warned that his fellow Republicans risk a “bloodbath” in the 2026 midterm elections if Donald Trump’s tariffs cause a recession.9 If Trump loses that vote and control of Congress, power will quickly drain from the administration.
All this of course, doesn’t mean that Trump’s plan will work, either in forcing trading partners to renegotiate tariffs or in reviving domestic manufacturing. He is certainly taking a huge gamble. Destroying business, investor and consumer confidence is the easy part. Once an economic downturn begins, it tends to gather momentum that can be very difficult to halt and reverse. So, let’s hope that Trump really does have a plan and that the tariffs will prove very short lived.
1 https://www.independent.co.uk/tv/news/trump-tariffs-bbc-sebastian-gorka-newsnight-b2726973.html
2 https://www.wsj.com/world/china/china-trump-tariff-foreign-policy-6934e493?mod=hp_lead_pos7
6 https://www.youtube.com/watch?v=qlyDnbNBiXE
7 https://www.straitstimes.com/world/united-states/what-trump-aims-to-achieve-with-his-tariff-plans
8 https://www.youtube.com/watch?v=f1CdbCsetpw
9 https://www.azerbaycan24.com/en/top-republican-warns-of-midterms-bloodbath/
Source: Worldbox Press Release
About Worldbox Business Intelligence
Worldbox Business Intelligence, headquartered in Switzerland, is a Global API data solution provider of business intelligence and used in data analytics.
With the Global API solution Worldbox Business Intelligence enables clients and partners a frictionless real time onboarding, KYC and compliance verification, while rapid global investigations are provided, if needed.
Worldbox Business Intelligence provides global data in a standardised structure on more than 350 Million companies worldwide. It’s global network of subsidiaries, branches and desks allows the precise and efficient collection of data on key target territories for clients and partners.”
“Worldbox Business Intelligence – Bringing Swiss Precision To Data”
Copyright (C) 2025 Worldbox Business Intelligence. All rights reserved.
Our mailing address is:
Worldbox Business Intelligence
Breitackerstrasse 1
Zollikon
Zurich 8702
Switzerland
