The impact of these tariffs on the world economy will be huge.
They can be measured by the lines on a chart of US tariff revenue jumping to levels not seen in a century – beyond those seen during the high protectionism of the 1930s.
Or in the overnight stock market falls, especially in Asia.
But the true measure of these changes will be significant changes to long-standing global avenues of trade.
At its heart this is a universal tariff of 10% on nearly all imports into the US for every country, coming in on Friday night. On top of that dozens of “worst offenders” will be charged reciprocally for having trade surpluses.
The tariffs on Asian nations are truly remarkable. They will break the business models of thousands of companies, factories, and possibly entire nations.
Some of the supply chains created by the world’s biggest companies will be broken instantly. The inevitable impact will surely be to push them towards China.
Is this just a grand negotiation? Well the US administration appears to be claiming the tariff revenue for planned tax cuts. The scope for quick adjustment seems limited. As one White House official said bluntly: “This is not a negotiation, it’s a national emergency”.
The US’s formula for the so-called “reciprocal tariffs” basically just charges a country for having a goods trade surplus with the US, exporting more to America than it imports. Then even if there is no surplus it whacks up the charge at the universal baseline of 10%.
All this reveals two things. The aim of policy is to reduce the US trade deficit to zero. That is a remarkable rerouting of world trade flows and explains the specific punitive focus on Asia.
Secondly it is clearly the case that bilateral negotiations have not made much of a difference, or in fact any difference.
Deficits and surpluses are a normal part of a functioning trade system where countries specialise in what they are the best at making. The US has now spectacularly ended that logic.
But shifting factories will take years. Tariffs at this scale on East Asia especially at 30 or 40% will hike prices of clothes, toys and electronics much more quickly.
The question now is how the rest of the world responds.
There are opportunities for some consumers in Europe to benefit from cheaper diverted trade in clothes and electronics. Outside of an inward-looking number one world economy, the rest of the big economies may choose to integrate trade more closely.
As Tesla’s slumping sales may illustrate, only part of this story is about the response of governments. These days consumers can retaliate too. It may be a new sort of social media trade war.
Europe could decide not to continue buying the consumer brands created in the US, and loved across the world.
The monopoly in the provision of social media services by big US tech could be shaken up.
And US authorities may need to raise interest rates to combat the inevitable spike in inflation.
A messy global trade war looks inevitable.
