Trump tariffs or American localization

US President Donald Trump, using the International Emergency Economic Powers Act of 1977, has announced tariffs on virtually all imports into the United States. The tariffs target 74 countries, including the EU. They will take effect on April 5 and 9, writes censor.net.

President Donald Trump

Yulia Svyrydenko, Minister of Economy, stated that for Ukraine, the new tariffs from the US are "difficult, but not critical," because, according to her, Ukrainian tariffs on American goods are quite low.

It is clear that in addition to the purely political dimension, this step has very specific economic consequences.

The leading American think tank, the Tax Foundation, has published an interesting analysis. Some of the theses from it, which are worth reading first, are presented below.

Tariffs are introduced in two types: targeted, i.e. on imports from certain countries, in particular, China, Canada, Mexico, Venezuela, etc., and on groups of goods - semiconductors, pharmaceuticals, steel, aluminum, cars, etc.

Scientific research and modeling of the effect of introducing tariffs indicate that the consequences for the US economy as a whole will be negative: rising prices, lower production and employment.

The results of the simulation, without taking into account the effect of symmetrical tariff increases by other countries, are presented in the following table. In particular, the introduction of tariffs is projected to reduce the previously expected level of US GDP by 1,1%, which in value terms is more than 300 billion US dollars. The calculations also show that capital investment will decrease by 0,8%. The loss of 970 thousand jobs is expected! Even for the US, this is too much. At the same time, the irony of fate is that they may have the greatest negative effect precisely for the voter of the current president.

The average rate of tariffs being introduced is the highest since 1946.

On average, the introduction of tariffs in 2026 would reduce the level of well-being of the population, measured as disposable income after taxes, by 1%. At the same time, the negative impact on well-being would be the smallest for the richest 1% of Americans (only ‑ 0,8%).

The tariffs will lead to additional tax revenues for the federal budget.

Taking into account the purely mechanical effect of changing the tax base, additional revenues from tariffs this year will amount to $127,7 billion, and if they are maintained over the next 10 years, they will bring an “unplanned” $1724,4 billion to the federal budget.

Taking into account the impact of the behavioral effect on the dynamics of the tax base, additional revenues are projected at a slightly lower level. In particular, in 2025 — $103,4 billion, and over ten years — $1385,3 billion. In other words, this means that higher tariffs lead to lower rates of economic growth, income levels of the population and corporations.

Given the $1 trillion reduction in US federal budget expenditures announced by DOGE over the next few months, this initiative could have a significant health-improving effect on the public finance system.

The Tax Foundation gives us a vivid example of how to analyze government tax initiatives.

In this context, the formulation typical for domestic lawmakers in tax bills, in the financial and economic justification section, ‑ “the implementation of the provisions of the bill does not require additional financial expenditures from the State and local budgets of Ukraine and will not lead to a reduction in budget revenues” ‑ does not stand up to any criticism!

What other conclusions can be drawn for Ukraine, beyond this lyrical digression?

In the total volume of foreign trade turnover over the past year, the share of the United States is only 4% (exports 869 million, imports 3453 million dollars). Accordingly, Trump's tariffs will not have any noticeable negative impact on the economy of Ukraine. Over the past ten years, this indicator has increased by only 1,6 percentage points. During the same period, the share of trade turnover with China has more than doubled. Therefore, for our economy, China's tariff policy is more important than the United States.

One of the main lessons for us from this experiment is still ahead, because the return of the “era of protectionism” may have painful short- and medium-term consequences, however, a long-term healing effect for the US economy. At least it was so for many countries and, first of all, the losers in World War II (Germany, Finland), which adhered to an economic policy of protecting national producers. But in those days, the global economic world was different. Although, as then, the powers of this world shared it among themselves.

How will it be this time?

We'll see, because the status quo has been disrupted and there is something to explore.

Read also on Newsky "Ukraine sold the arrested tanker that Russia used to block the Kerch Strait in 2018" and look at "Boring Pence" YouTube channels.

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