Economics
U.S. tariff rates under Trump will be higher than the Smoot-Hawley levels from Great Depression era
U.S. President Donald Trump holds a chart next to U.S. Secretary of Commerce Howard Lutnick as Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., on April 2, 2025.
Carlos Barria | Reuters
The tariff policy outlined by President Donald Trump on Wednesday appears set to raise the level of U.S. import duties to the highest in more than 100 years.
The U.S. introduced a baseline 10% tariff on imports, but also steep country-by-country rates on some major trading partners, including China. The country-by-country rates appear to be related to the trade deficit the U.S. has with each trading partner.
Sarah Bianchi, Evercore ISI chief strategist of international political affairs and public policy, said in a note to clients late Wednesday that the new policies put the effective tariff rate above the level of around 20% set by 1930’s Smoot-Hawley Tariff Act, which is often cited by economists as a contributing factor to the Great Depression.
“A very tough and more bearish announcement that pushes the overall U.S. weighted average tariff rate to 24%, the highest in over 100 years – and likely headed to as high as 27% once anticipated 232s are complete,” Bianchi wrote. The “232s” is a reference to some sector-specific tariffs that could be added soon.
JPMorgan’s chief U.S. economist Michael Feroli came up with similar results when his team crunched the numbers.
“By our calculations this takes the average effective tariff rate from what had been prior to today’s announcement around 10% to just over 23%. … A White House official mentioned that other section 232 tariffs (e.g. chips, pharma, critical minerals) are still in the works, so the average effective rate could go even higher. Moreover, the executive order states that retaliation by US trading partners could result in even higher US tariffs,” Feroli said in a note to clients.
An estimate from Fitch Ratings was in the same range, with a report saying the tariff rate would hit its highest level since 1909.
Trump referenced the Smoot-Hawley Act in his Rose Garden remarks on Wednesday. The president said the issue was not the tariffs imposed in 1930 but the previous decision to remove the higher tariffs that existed earlier in the 20th century.
“It would have never happened if they had stayed with the tariff policy. It would have been a much different story. They tried to bring back tariffs to save our country, but it was gone. It was gone. It was too late,” Trump said.
The full economic impact of the new tariffs will likely depend on how long they are in place and if other countries retaliate. Trump and Treasury Secretary Scott Bessent have indicated that the country-by-country tariffs could come down if those trade partners change their policies.
JPMorgan global economist Nora Szentivanyi warned that Trump’s tariffs were likely to push the U.S. and global economy into a recession this year if they are sustained.
Economics
President Donald Trump says Fed Chair Powell should cut interest rates and ‘stop playing politics’
Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019.
Aly Song | Reuters
China’s finance ministry on Friday said it will impose a 34% tariff on all goods imported from the U.S. starting on April 10, following duties imposed by U.S. President Donald Trump’s administration earlier this week.
“China urges the United States to immediately cancel its unilateral tariff measures and resolve trade differences through consultation in an equal, respectful and mutually beneficial manner,” the ministry said, according to a Google translation.
It further criticized Washington’s decision to impose 34% of additional reciprocal levies on China — bringing total U.S. tariffs against the country to 54% — as “inconsistent with international trade rules” and “seriously” undermining Chinese interests, as well as endangering “global economic development and the stability of the production and supply chain,” according to a Google-translated report from Chinese state news outlet Xinhua.
Separately, China also added 11 U.S. firms to the “unreliable entities list” that the Beijing administration says have violated market rules or contractual commitments. China’s ministry of commerce also added 16 U.S. entities to its export control list and said it would implement export controls on seven types of rare-earth related items, including samarium, gadolinium and terbium.
CNBC has reached out to the White House for comment.
Beijing, which also entertained a tenuous trade relationship with Washington under Trump’s first term, had warned that it would take “resolute counter-measures” to safeguard its own interests after the White House disclosed its latest sweeping tariffs on Wednesday.
Other U.S. trading partners had held off from announcing retaliatory tariffs amid hopes of further negotiations, with the European Union nevertheless voicing a readiness to respond.
The mutual U.S.-China levies are set to impact a trade relationship worth $582.4 billion in goods in 2024, according to the Office of the U.S. Trade Representative.
Analysts expect the U.S.’ protectionist trade policies to steer China toward other trading partners and see it implement further stimulus measures in an effort to galvanize the economy. China has been battling a property crisis and weak consumer and business sentiment since the end of the Covid-19 pandemic.
China’s retaliatory tariffs announced Friday exacerbated declines in global markets which had already been thrust into turmoil by fears of inflationary, recessionary and global economic growth risks following the White House’s tariffs.
Employers added 228K jobs in March, but lost 700 in accounting
President Donald Trump says Fed Chair Powell should cut interest rates and ‘stop playing politics’
Powell sees tariffs raising inflation and says Fed will wait before further rate moves
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoYoung Americans are losing confidence in economy, and it shows online
-
Economics1 week agoPCE inflation February 2025:
-
Personal Finance1 week agoStudent loans could be managed by the Small Business Administration
-
Accounting7 days agoIRS sets new initiative with banks to uncover fraud
-
Economics1 week agoWhite House denials over the Signal snafu ring hollow
-
Economics1 week agoConsumer sentiment worsens as inflation fears grow, University of Michigan survey shows
-
Economics1 week agoTexas troopers are in more and more lethal car chases
-
Personal Finance1 week agoMillions of student loan borrowers past-due after bills restarted: Fed