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Trump's bold tariff policy move sees Africa's trade relationship with the U.S. experience a major shift.This intends to counter foreign tariffs, trade barriers, and currency manipulation claimed by his administration.Countries without specific trade agreements with the U.S. face a baseline 10% tariff on all imports into the U.S., while those with "tariffs charged to the U.S." above 20% (where half this value falls above 10%) are charged higher through "reciprocal" tariffs. For example, Namibia's "42%" tariff charged to the U.S. translates to a 21% tariff charged to Namibia.However, the claimed tariffs actually refer to the trade balance with the U.S., divided by imports from that country, divided by two.Trump has labelled countries with higher tariffs as "not kind to us", although a trade balance is not black and white - for example, a poor nation may not be able to afford U.S. imports, but heavily rely on agricultural exports to the U.S., and are thus disproportionately impacted by extremely high reciprocal tariffs. The calculation used by his administration has baffled economists, given such a simple calculation which fails to consider many key variables.With commodity prices down significantly in less than 24 hours after this move, the globe is at risk of economic decline and deflation, given that the U.S. is the world's largest consumer. However, the U.S. may see stagflation - an economic contraction combined with high inflation.

Chart of the Week

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Allgemeine Zeitung 2025-05-16

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Chart of the Week

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Allgemeine Zeitung 2025-05-16

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