Great America or Regret America?

I came up with this title inspired by Trump’s famous campaign slogan. Like many writers—myself included—I’ve focused on analyzing the potential harm Trump’s America could inflict on the world. But now, the spotlight is shifting back to the U.S. itself: What could Trump’s presidency mean for America? The answer to that question will undoubtedly have global repercussions.

You may recall that shortly after the first month of the Russia-Ukraine war, we wrote about how overwhelming it was to keep track of the countless sanctions imposed on Russia. At the time, a portal was launched to monitor these sanctions in real-time—a solution to the confusion.

Recently, I found myself similarly exhausted by tracking the constant back-and-forth of executive orders signed by President Trump. Out of curiosity, I searched online—and there it was: a portal dedicated to Trump’s tariffs. The Peterson Institute for International Economics created a webpage that tracks Trump’s executive orders and the corresponding retaliatory measures from affected countries.

The first major consequence of the tariff wars, which became more complex with exemptions and revisions, is uncertainty—a reality confirmed by the Chicago VIX (fear and uncertainty) index reaching record highs. Between February 19 and March 10, approximately $5 trillion evaporated from the U.S. stock market, largely due to this growing uncertainty. Yet, given the liquidity of these financial instruments, reactions—whether up or down—occur rapidly, making it hard to get a clear picture.

What is the boomerang effect?

A boomerang is designed to return to its thrower if wind, speed, and technique align perfectly—it always comes back to the starting point. The economic turmoil now facing the U.S. is a textbook example of the boomerang effect. The exuberance the American economy experienced before Trump’s presidency has transformed into anxiety and heavy losses.

As we previously discussed, every action taken by Trump’s America has been met with reciprocity—there hasn’t been a single sanction left unanswered. This raises a crucial question: Since American multinational corporations benefit the most from global trade, are they now the ones bearing the brunt of other countries’ retaliatory measures?

If things continue in this direction, each country may be forced to "play in its own backyard." This is why U.S. businesses are starting to bleed.

Another issue lies in products that the U.S. cannot avoid importing. According to a letter seen by Reuters, major packaged food producers—like Quaker Oats and Folgers—have requested tariff exemptions on essential imports like cocoa and fruit. PepsiCo, Conagra, and J.M. Smucker also joined this plea, asking President Trump to exempt ingredients that cannot be sourced domestically.

Meanwhile, tariffs on consumer electronics are also hitting Americans hard. For the first time, the U.S. is imposing tariffs on products like smartphones, desktop computers, and tablets. A significant portion of these goods—87% of video game consoles, 78% of smartphones, and 79% of laptops—are imported from China, and they are all now subject to these tariffs. For a nation struggling to cope with annual inflation rates of 4-5%, these 20% price hikes are a heavy burden.

In February, Taiwanese company Acer announced that due to a 10% tariff on Chinese imports, laptop prices would increase by the same margin. U.S. tech giant HP also warned that its profits would take a hit, as no company’s profit margins can absorb these rising costs. Now, the tariff rate has climbed to 20%.

Uncertain revenue prospects

Based on 2024 import data from Canada, Mexico, and China, these newly announced tariffs could increase U.S. tariff revenues by approximately $300 billion, assuming demand remains unchanged. However, this sum only covers about one-third of the annual cost of extending Trump’s Tax Cuts and Jobs Act.

Moreover, these projections fail to account for companies shifting their supply chains to tariff-free countries. As U.S. consumers continue to feel the sting of inflation and cut back on purchases of pricier goods, the overall increase in tariff revenue is likely to fall short of expectations.

While the immediate impact on consumers is undeniable, the potential disruptions to production networks could pose an even greater long-term threat to the U.S. economy—a topic we will explore in our next article.