US reciprocal tariffs and the impact on the US economy

Last week President Trump imposed matching tariff rates on countries that place higher tariffs on American goods. He hopes that the scope of these measures will help lower the U.S. trade deficit. However, many economists are concerned that the wave of tariffs could fuel inflation and potentially push the U.S. economy into a recession. Below is a very good video from the Wall Street Journal discussing the impact of the Trump administration’s reciprocal tariffs.

Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners. This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing.

For more on protectionism view the key notes (accompanied by fully coloured diagrams/models) on elearneconomics that will assist students to understand concepts and terms for external examinations, assignments or topic tests.