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Al-Ahram Weekly
04-05-2025
- Business
- Al-Ahram Weekly
Trump tariffs: ‘Not a Swiss Army knife' - Focus - Al-Ahram Weekly
On 2 April, US President Donald Trump imposed what he called 'reciprocal tariffs' on almost all other countries. He called it 'Liberation Day' and America's 'Declaration of Economic Independence'. 'For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,' Trump said. In the same speech, he announced that the US trade deficit with the rest of the world was a threat to US national security. The 'Liberation Day' tariffs were displayed on a chart of tariffs imposed on different countries, including very high tariffs on China, the European Union, and an across-the-board 10 per cent tariff on other countries, including Egypt, which has a trade deficit with the United States. The Trump tariffs, and the way they were announced, led to several controversies, including possible errors in the mathematical formula used to calculate them, the lack of tariffs on Russia, and the tariffs on so-called 'penguin islands' off the shore of Australia. There is also the earlier controversy about the taxes imposed on Canada in January, followed by retaliatory tariffs by Canada and Canadian threats to cut off electricity exports to the United States, which led Trump to take a step back and call for negotiations. Trump's new tariffs led to a global wave of panic, due to their forecast effects on international trade and the global economy. US and global investors and consumers rightfully feared that Trump's tariffs would cause a decline in global trade, an increase in costs for consumers, and, potentially, a downward economic spiral similar to that which happened during the Great Depression of the 1930s. As a result, US and global markets, and even the US dollar itself, then plunged. The dollar usually strengthens at times of crisis since it is seen as a safe haven. This was seen during the 2008 world financial crisis, during the Covid-19 lockdowns, and during the global supply chain crisis in 2021 that followed. Today, however, the world is living through a crisis, but the dollar is getting weaker because investors worldwide are selling dollar assets. Trump's policies have led to a decline in global confidence in US decision-makers and, by extension, in the US dollar itself. Even so, to be fair the dollar's decline is not deep, and people around the world have been putting their faith in the US dollar as a safe haven for the past 80 years. A few days of instability cannot reverse this eight-decade trend, even if it is still worrying to the global markets. In response to the panic at these economic developments, Trump initially dug in on the tariffs and tried to address people's fears. In the days following the tariffs announcement, he posted tweet after tweet trying to instill confidence in investors and consumers. 'Be strong, courageous and patient! Greatness will be the result! Everything is going to work out well,' he said. However, on 9 April Trump reversed course and announced a 90-day pause on the tariffs. When asked about the reason for the flip-flop, he said that it was because people were getting afraid. 'They were getting yippy, you know. They were getting a little bit yippy, a little bit afraid,' he said. GETTING YIPPY Despite Trump's statement that he ordered the 90-day pause in the tariffs due to the American people getting 'yippy', the pro-Trump US network Fox News kept lavishing praise on him, saying that the pause was all part of his plan and that he was a master negotiator who was applying the lessons of his book The Art of the Deal published back in 1987. Trump himself claimed during a gala dinner on 9 April that the presidents and prime ministers of other countries were calling him and begging for a deal. However, his critics were left wondering what deal Trump had made out of the tariff announcements. No specific deals have been announced yet. One controversy regarding the Trump U-turn was that only four hours before he announced the 90-day pause on tariffs, Trump posted on his social-media channel Truth Social that 'this is a great time to buy!' In response, many investors rushed to buy stocks in Trump Media owned by the Trump family, causing its shares to increase in value by almost 25 per cent or twice the gain of the broader market after the 90-day pause announcement. This then raised concerns of insider trading: did Trump know, while he was posting that it was 'a great time to buy', that he would announce a 90-day pause a few hours later? The White House declined to give a direct answer to such questions and declared that it was 'the responsibility of the president of the United States to reassure the markets and Americans about their economic security in the face of non-stop media fearmongering,' referring to US media outlets that have criticised Trump such as CNN and CNBC. In any case, the 90-day pause did not end the uncertainty. While it temporarily reassured the markets, uncertainty still hangs in the air. One uncertainty that still looms is the US-China trade war. Trump announced that he would raise US tariffs on imports from China to 145 per cent. In response, the Chinese government announced a reciprocal 125 per cent tariff on US imports to China. However, in another U-turn by Trump, US Secretary of the Treasury Scott Bessent then announced on 23 April that there would be a de-escalation in the tariff war between China and the United States. Another uncertainty is looming over the public feud between Trump and Chair of the US Federal Reserve Jerome Powell. Trump wants Powell to reduce interest rates to encourage investment, while Powell, who is critical of Trump's economic and trade policies, wants to keep interest rates high to curb inflation. In response, Trump has hinted that he will fire Powell. It is probably not within the powers of the president to fire the chair of the Federal Reserve. But the possibility of this happening would be a precedent in US history and could jeopardise the independence of the US central bank, which takes decisions based on economic data, not on the political needs of the executive branch of government. This feud has been another cause for panic among American and global investors. In response, on 23 April, Trump announced that he would not fire Powell. WHY TARIFFS? The question on everyone's mind is: why is Trump imposing tariffs? And why is he announcing his policies and his feuds with his critics in such unusual ways? Many American investors have reportedly secretly wondered if Trump is insane. Is he? Or is there method in his madness? Trump has been a big believer in tariffs and trade wars since his first term as president in 2017-2021. He famously escalated the trade war with China to new heights during his first term, and he was supported in this by his economic advisors, including, most notably, White House Chief Strategist Steve Bannon, a great advocate of trade protectionism to insulate US industries from foreign competition. The situation is similar in Trump's second term, and there are economists who have provided support for Trump's tariff policies. The main think tank behind Trump's tariff policies in his second term is American Compass, which has close ties to Vice President J D Vance and Secretary of State Marco Rubio, both of whom have spoken out about protecting American industries and American workers from foreign competition. American Compass is headed by economist Oren Cass, who is a critic of the Republican Party's traditional support for free trade and free enterprise regardless of its effects on American workers. He calls for more government intervention to correct the negative effects of free trade on American workers, who, he says, have lost their jobs owing to foreign competition. Cass is specifically critical of China, saying that China is cheating on free trade and stealing US technology and intellectual property rights and is manipulating its currency the yuan. As a result, free trade with China is not actually free, he says. He calls for government interference in the markets to protect US workers and manufacturing, and he believes that tariffs are an effective way of achieving this goal. He also believes in tariffs as a pressure card to force countries to renegotiate the global political and economic order in America's favour and to help the US to build a new world order based on new political realities such as the rise of China and the losses the US economy has suffered from foreign competition. He is critical, however, of the way the Trump administration announced these tariffs, and he has stated that in situations like these the US government has to provide certainty, consistency, clarity, and stability. Regarding the weakening US dollar, it may be true that the Trump administration has weakened the dollar, thinking that this will make US exports cheaper and therefore increase its exports. Indeed, Trump called the strong dollar in 2024 'a big currency problem' in an interview with Bloomberg because it prevented an increase in US exports. Again, there are economists who have provided Trump with intellectual support for such ideas. Most notably Stephen Miran, Trump's current chairman of the Council of Economic Advisers, wrote a report in November 2024 titled 'A User's Guide to Restructuring the Global Trading System' in which he hinted that a 15 per cent drop in the value of the US dollar was needed to increase America's exports. This arrangement of increasing tariffs, weakening the US dollar, and building a new international economic order is also part of the so-called Mar-a-Lago Accord, a policy devised by Trump, Miran, and Secretary of the Treasury Scott Bessant. Another question concerns the reason for the unusual way Trump announced his tariffs, followed by his tweets, and then his U-turns and the continued uncertainty. All of this has caused panic and instability in the US and global markets. Is Trump purposefully being overdramatic to distract the American public from the fact that he cannot reduce grocery prices on day one of his presidency like he promised in his 2024 presidential campaign? Trump got elected in November 2024 in large part because of high inflation rates under the former Biden-Harris administration, which made many Americans unable to keep up with the rising prices and fearing that they would not be able to put food on the table or pay their rent or their children's school fees. Trump promised that he would get inflation down from day one of his taking office, even though it was a natural and expected result of the US economic recovery that followed the removal of the Covid lockdowns in 2021. Trump of course has not managed to get US inflation down, and he does not seem to have a coherent policy to do so. Is his unusual behaviour in announcing the tariffs and his other unusual announcements such as Canada becoming the 51st US state and hinting that he would use the US military to take over Greenland from Denmark part of a plan to distract the American people from his lack of real solutions to inflation? Many analysts claim that Trump loves to be in the spotlight, but sometimes he overdoes it. This was one of the reasons why he lost the elections to former president Joe Biden in November 2020, commentators say: the American people were tired of too much drama in his first term, and they were not satisfied with Trump's handling of the Covid-19 pandemic. OTHER QUESTIONS Could Trump be following former US president Richard Nixon's 'madman theory' of negotiations, giving the world the impression that he is madman who will stop at nothing and thus scaring it into submission? Or is he deliberately causing the chaos to make stock markets plunge and tweeting that this is a 'great time to buy' to make personal profits (assuming that the insider information theory is correct)? In any case, there is disagreement on whether Trump's trade policies are good for the US. Tariffs and protectionism alone cannot rebuild US industries or provide jobs for American workers, most economists agree. In order to achieve these goals, the tariffs have to be accompanied by other industrial policies which are, politically and economically, hard to reach agreement on in the American political system, and neither the Trump administration nor any other US administration seems ready to apply such policies. Tariffs lead to trade wars, which lead to recessions and the passing on of rising costs to consumers. Tariffs cannot pay for America's trade deficit, due to retaliatory tariffs by other countries that will reduce international trade. It is also very unlikely that tariffs can generate enough revenue to pay for the US trade deficit, which stands at $100 billion. Furthermore, most US economists say that the trade deficit is actually good for the US: it is paying money to other countries, and, in return, it is receiving the commodities it needs, since it is cheaper to import these commodities from abroad than to produce them at home. (American economist Robert Solow has made a famous joke to the effect that 'I have a trade deficit with my barber. He doesn't buy a darn thing from me!') The US can afford a large trade deficit because of the strong dollar and its position as a global reserve currency and safe haven. But the other major states' imposition of retaliatory tariffs on US imports have raised the question of how long Trump can hold on to his policies. The 145 per cent tariffs on China, for example, are clearly unsustainable, as seen in Bessent's announcement of a de-escalation. Regarding the aim of weakening the US dollar, this would also be a double-edged sword. A few days ago, the International Monetary Fund (IMF) reduced its growth forecast for the US and global economies. It said that the global economy will grow by just 2.8 per cent in 2025, down from its previous forecast in January of 3.3 per cent. Similarly, its forecast for US economic growth was reduced to just 1.8 per cent in 2025, down from its previous forecast of 2.7 per cent. China is now projected to expand by four per cent in 2025, which is half a percentage point away from the IMF's previous forecasts. As US economist Dani Rodrik has said, tariffs are 'not a Swiss Army knife' and not an all-purpose tool to solve America's problems. They will just make the world a more unstable place. *The writer is an associate professor of political science at the European Universities in Egypt (EUE). * A version of this article appears in print in the 1 May, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
Local Spain
07-04-2025
- Business
- Local Spain
What impact are Trump's tariffs having on mortgages in Spain?
The effects of U.S. President Donald Trump increasing trade tariffs are having are far reaching across the planet, from possibly causing a global trade war and another economic recession, to raising consumer prices and uncertainty in the stock market. Trump's tariffs are set to affect around 200 countries, including Spain, and are now having an impact on Spanish mortgages too. The MAGA leader claims the move will revitalise U.S. domestic manufacturing and amount to a "Declaration of Economic Independence', but this could be in detriment to the rest of the world. European Union products will be subject to a new 20 percent tariff, according to Trump. "For decades, our country has been ripped off. We've been ripped off for 50 years, but that's not going to happen again," the president said, clearly referring to Europe. This has caused concern among EU countries as to the repercussions and uncertainty the new tariffs will cause, and one of the proposed responses to the chaos caused by Trump is to freeze mortgage prices. Since June 2024, the European Central Bank has lowered the prices of bank loans, especially mortgages, but that may be set to end. According to the latest report from the Bank of Spain, the average interest rate on home loans here has seen notable decline this past year, from 3.49 percent in June 2024 to 2.96 percent in January 2025. But, the European Central Bank has warned that there is a risk that the Consumer Price Index will rise, which will directly influence its monetary policy. The Euribor, which is the indicator that sets lending rates, has slowed its rate of decline since the beginning of this year. As a result of this, banks in Spain have already decided to maintain current mortgage prices until the situation changes or until they know what the outlook will be. Due to the EU's new tariffs and the fact that its members have promised to increasing their military spend (including Spain), the ECB has not ruled out maintaining interest rates at 2.5 percent throughout 2025. However, market consensus suggests it could lower rates to two percent. It will all depend on the evolution of inflation. The slowdown in mortgage interest rates so far has had no impact on demand, which remains at an all-time high. T he amount of borrowing is up 27 percent compared to the same period last year and three percent compared to the previous month. What Trump's tariffs have done is put a spoke in the wheel of Spain's mortgage market, or at least created a lot more uncertainty, as 2025 was looking like a particularly good year to take out an hipoteca (mortgage) in Spain. To make matters even more difficult, housing prices in Spain continue to rise. In 2024, according to the General Council of Notaries, the cost of properties increased by 6.9 percent compared to the previous year. And by 2025, institutions such as BBVA Research and Bankinter's Analysis Department predict that they will rise by around five percent annually The financial site HelpMyCash has analysed all the scenarios and advised people that given the looming uncertainty, waiting too long to apply for a mortgage loan could be counterproductive. But, it has emphasised that the future is unpredictable so buyers should decide what is best for them. It's also worth noting that waiting to apply for a mortgage when the rates lower, could also mean that property prices have increased making it a similar risk, and meaning that borrowers still won't be in a better position.
Yahoo
05-04-2025
- Business
- Yahoo
Anthony Pompliano Praises Trump's Tariffs As Catalyst For Crypto Innovation
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Founder & CEO of Professional Capital Management, has praised the new tariffs introduced by President Donald Trump on Wednesday, arguing that they highlight the inefficiencies of traditional financial systems and bolster the case for decentralized finance solutions like Bitcoin (CRYPTO: BTC). What Happened: Speaking on a podcast, Pompliano linked the tariffs to broader economic shifts, while the crypto market faced significant declines amid fears of a global trade war sparked by the new policy. Pompliano emphasized that the tariffs underscore the vulnerabilities of centralized banking systems, which he claims have been weaponized against businesses for political reasons. Don't Miss: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.26/share with a $1000 minimum. Hasbro, MGM, and Skechers trust this AI marketing firm — invest pre-IPO from $0.55 per share. He recounted the Trump family's experience with banks like Capital One, Chase, Bank of America and First Republic, which canceled their accounts during Donald Trump's presidency, a move he described as "political lawfare." This experience, shared by Eric Trump on the same broadcast, drove the family to embrace cryptocurrency. "I realized the power that these banks had, and I realized how they were exerting that power, and they were canceling businesses all over our country," Eric Trump said, explaining his shift toward crypto. The tariffs, unveiled by Trump in a White House Rose Garden ceremony, impose a "reciprocal tariff rate" set at 50% of what trading partners charge the U.S., targeting countries like Vietnam, Cambodia and Sri Lanka with the steepest increases, while sparing Canada and Mexico. Trump called the move "our Declaration of Economic Independence," stating, "April 2nd will forever be remembered as the day American industry was reborn." However, the announcement triggered a sharp decline in crypto markets on Wednesday, with Bitcoin plunging to $82,400 levels from its all-time high of $108,786. Major altcoins like Solana (CRYPTO: SOL), BNB (CRYPTO: BNB) and Dogecoin (CRYPTO: DOGE) also traded down 8-10% after the It Matters: Despite the market downturn, Pompliano sees the tariffs as a validation of crypto's potential to address systemic financial issues. He argued that blockchain technology offers a more efficient alternative to traditional banking, which he criticized for its outdated practices. "There's not a single thing that those banks do that can't be done better, cheaper, more efficiently, faster on blockchain," Pompliano stated, highlighting Bitcoin's role as a store of value and a hedge against real estate. The broader economic context also includes concerns about the rising costs of materials for AI data centers, as noted by Tory Green, CEO of a global GPU-power aggregator. Green dismissed concerns about rising costs for AI infrastructure caused by tariffs. Instead, he argued that the U.S. should prioritize tapping into idle computing resources rather than building new data centers. "We're significantly underutilizing the resources we already have," Green said. "The real problem isn't cost—it's inefficiency. We don't need more concrete; we need better connectivity." Green pointed to benchmarks showing that idle computers still consume up to 60% of the energy used by public cloud systems, and cited a recent MIT Technology Review report showing that 80% of China's AI data centers currently sit idle. Meanwhile, the Trump family has deepened its involvement in the crypto space, with Eric Trump and Donald Trump Jr. announcing their investment in a Bitcoin mining company, American Bitcoin, which aims to merge with Trumps American Data Centers to become the world's largest crypto miner and establish its own Bitcoin reserve. Eric Trump also highlighted the success of their venture, World Liberty Financial, which recently launched a stablecoin, reflecting their belief in crypto's transformative potential for the U.S. economy. Read Next: If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it? Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Last Chance to get 4,000 of its pre-IPO shares for just $0.26/share! Image: Shutterstock Send To MSN: Send to MSN This article Anthony Pompliano Praises Trump's Tariffs As Catalyst For Crypto Innovation originally appeared on
Washington Post
05-04-2025
- Business
- Washington Post
Will tariffs affect mortgage rates? What to know about the housing market.
As stock markets plunged and economists warned of a potential recession after President Donald Trump's implementation of massive new tariffs this week, some Americans wonder whether there may be a silver lining — lower mortgage rates. Trump on Wednesday announced the largest increase in tariffs in U.S. history, a move he says will revitalize domestic manufacturing and amount to a 'Declaration of Economic Independence.' His order imposes a new 10 percent tariff on all imported goods and higher import taxes tailored to about 60 countries.
Washington Post
04-04-2025
- Business
- Washington Post
How could Trump's new tariffs affect you
Politics How could Trump's new tariffs affect you April 4, 2025 | 8:39 PM GMT President Donald Trump announced the largest increase in tariffs in U.S. history on April 2, unveiling new import duties that he said would revive domestic manufacturing and amount to a national 'Declaration of Economic Independence.'
