IMF official： Trump's tariffs spell ensuing chaos at home

Donald Trump speaks to reporters aboard Air Force One while flying to Washington DC on Mar. 16, 2025. (Photo: CFP)

Donald Trump speaks to reporters aboard Air Force One while flying to Washington DC on Mar. 16, 2025. (Photo: CFP)

Talking to journalists aboard Air Force One late last Sunday, US President Donald Trump said he would impose both reciprocal tariffs and additional sector-specific duties on April 2.

"They charge us, and we charge them," Trump noted regarding the reciprocal tariffs. "Then, in addition to that, on autos, on steel, on aluminum, we're going to have some additional tariffs."

"Maybe that's something that we are beginning to appreciate as part of the chaos," noted Harold James, official historian of the IMF, as well as Professor of History and International Affairs at Princeton University, in an exclusive interview with GDToday earlier this month.

The mindset of Trump and US bipartisanship

Going back 35 years or so, Donald Trump, a Manhattan real estate developer at the time, appeared on television to call for a 15% to 20% tax on imports from Japan due to his clashes with Japanese investors in the 1980s.

"I believe very strongly in tariffs," Trump told a journalist in 1988. "America is being ripped off. We're a debtor nation, and we have to tax, we have to tariff, we have to protect this country."

Harold James noted that some of his current rhetoric evolved in the 1980s. He detailed that at a moment when many believed that Japan was taking over the whole world, Trump was pushing very firmly for the toughest stance against Japan.

"That mindset is what shapes his position today," James analyzed. Now Trump is applying that and has broadened the focus in the sense that he looks at countries that have a bilateral trade imbalance with the US.

For instance, Germany's trade surplus with the US reached a record level last year, expanding to €70 billion. German automobiles are very highly visible on the streets of New York.

Also, US households have a lot of electronic equipment made in China. "If I turn my laptop upside down, I will see it's made in China," noted James.

Additionally, when imposing tariffs on China since Trump's first term, as James observes, another mindset has become an almost bipartisan political wisdom. Namely, the opening of China, particularly the aftermath of its accession to the WTO in 2001, produced a surge of imports that cost America jobs in manufacturing and is, in that sense, responsible for the malaise that has gripped the US in the 2010s.

Nonetheless, in James' view, China is regarded as the scapegoat. The loss of US manufacturing jobs is due as much to technical change as to trade policy.

"Many of these jobs would have gone anyway because of technical change, but that's the mindset," he confessed.

An unwelcoming fallout at home

According to Harold James, Trump's tariffs herald repercussions domestically.

Imported goods from China, Canada, and Mexico will bear the brunt of higher prices as the three are the big trade partners of the U.S. In 2024, Mexico was the largest trade partner of the U.S. at $800 billion, followed by Canada at $761 billion, and China at $582 billion.

"Price increases for different goods affect people in different ways," James underscored.

For some goods, such as fruits and vegetables that are imported particularly from Mexico, they are likely to become expensive very quickly owing to tariffs on popular foods that Americans love to buy a lot.

He set the example of avocados imported from Mexico, which have come to be an American tradition. "When people make guacamole out of avocados, they can finish that very quickly. They're going to be very unhappy about that," noted James.

James notes that Trump has a theory that the costs of tariffs will be fundamentally borne by the producers. However, there is a consensus among economists that the costs will be borne by American consumers.

Also, it's detrimental for American businesses. As James observes, American businesses rely on imports of many basic products such as aluminum and timber, particularly from Canada.

"Those imports are going to be more expensive. The consequence is that American industry will become less competitive as a result of this," he added.

Retaliation from trading partners

Naturally, as James projects, Trump's tariffs will incur more countermeasures from his targeted countries.

China has already announced retaliatory tariffs on U.S. agricultural products such as soybeans.

According to James, this is an area where there's already been some tension, as American farmers know that they rely heavily on exports, especially to Asian markets.

"When they face these higher costs, they are also going to transmit their political anger," noted James.

He then analyzed that China and EU countries know what they're doing in terms of responding to these measures to escalate the political pressure on Trump to turn back on his policies.

Due to his steadfast belief in tariffs, it's very difficult to know in advance how hard the pain will need to be in order to convince Trump that this is the wrong measure.

"Many people know this already, but he doesn't yet appreciate that," James lamented.

Reporter: Zhang Ruijun

Editor: Yuan Zixiang, James, Shen He