US President Donald Trump’s sweeping “reciprocal” tariffs—most notably a stunning 104% levy on Chinese imports—came into force on Wednesday, starting a global trade war, shaking markets, triggering alarm from economists, and creating fissures within the Republican Party.
In response, China is raising its retaliatory tariff on US goods to 84%, up from 34%, effective April 10, the finance ministry said on Wednesday. “The tariff escalation against China by the United States simply piles mistakes on top of mistakes (and) severely infringes on China’s legitimate rights and interests,” the ministry said. The ministry emphasized its resolve, saying, “If the US insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end.”
So far, Chinese President Xi Jinping has not shown any interest in bargaining with Trump.
Why it matters
Trump’s trade war isn’t just an economic experiment—it’s a full-blown political gamble that may unravel his presidency, the Republican hold on Congress, and the global trade system built after World War II.
“Unless he suddenly changes direction, which is unlikely, Donald Trump is committing political suicide,” writes economist Swaminathan Aiyar in The Economic Times, calling it a “Riveting Political Suicide Show.” “Such an outcome is to be wished devoutly,” writes Aiyar. “It will mean the end not just of Trump, but of Trumpism.”
The tariffs, billed by Trump as a righteous strike against “unfair” trade, are already causing deep economic reverberations, with Wall Street crashing, Treasury yields surging, and even Trump loyalists expressing discomfort.
Senator Ted Cruz warned the fallout could be a “blood bath” for Republicans in the 2026 midterms, paving the way for Democratic control of both houses. That, he said, would cripple Trump’s presidency in its final two years and potentially spark a rebellion within the GOP itself.
Former treasury secretary Larry Summers issued a starker warning: the tariffs are likely to induce a US recession, potentially costing 2 million jobs and $5,000 per family in lost household income.
Trump tariffs may hit China’s GDP growth, which will impact global trade.
The big picture
Markets in meltdown: Hedge fund titan Bill Ackman called the tariff math “stupidity.” JPMorgan’s Jamie Dimon warned in his investor letter that a recession is now probable. BlackRock’s Larry Fink was even blunter: “The economy is weakening as we speak.”
China’s counteroffensive: Beijing accused Washington of “bullying practices” and vowed “firm and forceful” retaliation. It may ban key US imports—like poultry, soybeans, and Hollywood films—and cut cooperation on fentanyl and IP protection.
Allies alienated: Even countries with zero tariffs on US goods—like Israel—have been slapped with new duties. Others like Vietnam and Taiwan offered to reduce their tariffs to zero, only to be rebuffed.
Trump’s trade logic is simple but dangerous: Any bilateral trade deficit implies unfair trade. Economists call this “economic illiteracy.”
Between the lines
Trump believes tariffs will fund income tax cuts, restore US manufacturing, and create a new economic order with the US at the helm.
He’s openly idolized President William McKinley, who funded federal spending in the 1890s entirely through import duties. Trump’s team estimates $600 billion in tariff revenue—enough to slash or eliminate income taxes. But this assumes imports don’t collapse, which contradicts Trump’s goal of reducing them. A classic contradiction.
“He cannot both slash imports and gain massive tariff revenue,” notes Aiyar. “None in the Cabinet dares tell him that.” Source: TOI
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