In speaking in, he announced a large package of tariffs that affects and Brazil, even economic rivals like China. The official argument would be to achieve a “tariff reciprocity”, punishing countries that would allegedly enjoyed previous agreements. For some the idea sounds attractive in the short term. However, in the long, there are high chances of inflation and falling competitiveness in the American industry.
A few weeks ago, I played with American friends that they would have a free sample of Brazil :. After all, we Brazilians know the weight of a long history that everything makes it expensive and stifles growth. Now it seems that they can experience this reality closely.
This new account overloads American families already pressured by a global inflation scenario. At the same time, as another target of tariffs, causing seizure between exporters and analysts who observe the possible shrinkage of international exchanges.
Trump’s rhetoric also resurrects economic nationalism that can from various partners. No one comes out unharmed when there is one: higher cost of inputs, investment contraction and insecurity in productive planning. Not by chance, in his speech, the president avoided mentioning the broader consequences of this protectionist turn. He has made puns to promise that he will make America “accessible again,” but blamed the previous management for inflation, responsible for the pricing.
The debate on tariffs is not new and has been analyzed in several studies. According to Ralph Ossa’s article published in 2014, commercial wars can cause jumps in rates more than 10 times above ideal, overthrowing global welfare on a significant scale. This is because, when seeking immediate gains, nations find themselves in a spiral of retaliation that brakes trade and raises costs. Some internal sectors may benefit for a short time, but most economic agents and consumers suffer from loss of competitiveness and high prices.
Today’s world has integrated global chains, and any rupture generates scattered impacts. Companies depend on imported inputs at competitive prices to maintain production. When importing imports, a domino effect that crosses borders is created and is reflected in inflation rates.
In the eagerness to defend the domestic industry, Washington can, without planning, repeat errors of past commercial confrontations, when cross -back retaliation aggravated financial crises and left the consumer in the background. The phenomenon tends to repeat themselves every time governments seek simplistic solutions to complex productivity challenges.
Therefore, it is necessary to be aware of the warning given by the study of OSSA: when raising tariffs, countries often aim at short -term gains, but end up fostering a game in which everyone comes out with liquid losses. If Trump’s goal is to “rebuild” the American, it makes no sense to trust policies that lead to unsuccessful protectionism, we have already seen how this strategy does not work.
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