America Imposes Highest Tariffs in 100 Years: Global Recession Fears Rise as Every Citizen Faces ₹2 Lakh Annual Loss
U.S. President Donald Trump, during his second term, announced a new round of tariffs on foreign goods. This declaration had an immediate negative impact on the U.S. stock markets. Investors feared the move would lead to higher prices and disrupt businesses.
Due to growing uncertainty, many investors began selling their stocks rapidly. As a result, major indices like the Dow Jones, S&P 500, and Nasdaq fell over 10% in just two days. Such a steep decline was last witnessed in March 2020 during the COVID-19 pandemic. Major tech stocks also plummeted, triggering panic among traders and businesses.
Responding to the market crash, the Trump administration had to suspend the tariffs for 90 days. However, Trump has now announced that new tariffs will be imposed on imports from around the world starting August 9. This move is expected to again harm the U.S. economy and increase the risk of a global recession.
Every American to Spend an Additional ₹2 Lakh Annually
According to Yale University’s Budget Lab, the average tariff rate in the U.S. has reached 18.3%—the highest in a century. The last time it was this high was in 1909 when it stood at 21%.
Due to these high tariffs, American households will spend an extra $2400 (approximately ₹2 lakh) this year. Products that previously cost $100 will now cost $118.3.
Wendong Zhang, an economist at Cornell University, warned that prices of goods made from steel and aluminum—such as refrigerators and washing machines—will rise significantly in the near future.
U.S. Economy Could Lose ₹11.6 Lakh Crore Due to Tariffs
Budget Lab estimates suggest that tariffs could reduce U.S. GDP by 0.5%. With the U.S. economy valued at $28 trillion, this translates to an annual loss of $140 billion—or ₹11.6 lakh crore.
The Tax Foundation has also noted that essential commodities like bananas and coffee—mostly imported—will see price hikes. Other items like fish, beer, and wine will also become more expensive.
As prices rise, consumers are likely to reduce their spending. While Trump claims that tariffs will strengthen the economy, experts argue they will lead to inflation and job losses.
Job Growth Slows Dramatically; Trump Fires Official Over Data
Recent government data shows that only 73,000 new jobs were created in July, against expectations of 1.09 lakh. Job growth had also slowed in May and June, with an average of just 35,000 jobs added per month—marking the slowest pace since 2010.
Frustrated by the numbers, Trump fired Bureau of Labor Statistics Commissioner Erica McIntyre on August 1, accusing her of manipulating the report for “political purposes.”
Tariff Retaliation Could Spark Trade War
When a major economy like the U.S. imposes tariffs, other countries often retaliate with their own. This tit-for-tat approach can escalate into a full-blown trade war. Although many nations are currently holding off on retaliatory tariffs, they may impose them to pressure the U.S.
In the 2018-19 trade war, for example, Trump imposed additional tariffs on Chinese goods, prompting China to retaliate by taxing U.S. imports like soybeans and automobiles.
China is a major consumer of American soybeans. The 25% tariff imposed by China caused soybean prices to surge, resulting in a 50% drop in U.S. exports. This severely impacted American farmers, forcing the U.S. government to release a $7.3 billion relief package for them.
Trump’s Tariffs Raise Global Recession Risk
Trump’s tariff policies have heightened fears of a worldwide economic slowdown. International agencies and financial experts warn that prolonged tariff wars could dampen global growth.
According to an IMF report published on April 22, if trade tensions escalate, global GDP growth could fall from 3.3% to 3.0% by 2025.
The OECD report from June 3 stated that Trump’s tariff policies would not only affect the U.S. but also harm the economies of Europe and Asia. Reduced production and exports could push the global economy toward synchronized recession.
The report also indicated that the U.S. would be the worst-hit, followed by China, India, Canada, Italy, and Ireland.
U.S. Soft Power Weakens on Global Stage
Trump’s tariff policies have strained relationships with long-time allies. Nations such as Canada, Japan, South Korea, and France have begun re-evaluating their diplomatic ties with the U.S.
These tariffs have weakened America’s historical bonds with friendly nations, causing them to lose trust in U.S. leadership. U.S.-Canada relations, once considered unbreakable, have grown tense under Trump’s presidency.
In Asia, the situation is no different. Japan and South Korea, which traditionally depend on the U.S. for security, are now seeking greater self-reliance amid growing uncertainty about America’s future commitment.
Initially, Japan tried to strengthen ties with the U.S. by increasing its defense budget. However, when the U.S. made further demands, Japan was offended and canceled a high-level defense and foreign minister meeting in July. Although both countries later signed a trade agreement, experts believe this is just a superficial gesture.
Australia also openly criticized the U.S.’s new demands. Soon after, the U.S. Department of Defense announced a review of the AUKUS defense pact—a key security agreement between the U.S., U.K., and Australia.
America’s Influence Declines Amid China’s Rise
Trump’s aggressive tariff strategy has eroded America’s soft power—its ability to influence other nations through appeal and diplomacy. This decline is especially evident in the South Pacific, where the U.S. is engaged in a strategic competition with China.
As America’s global influence weakens, China is gaining ground, making it increasingly difficult for the U.S. to maintain its dominant position in world affairs.
