Customs Cheat Sheet – New York Times

It was much worse than I expected. President Trump's attempt to reverse global trade rules by wiping out tariffs on dozens of countries, including key partners such as the European Union, Japan and China, has caused a meltdown in global markets and scrambled corporate executive offices.

Today, the 10% tariff is enforced on all American trading partners except Canada and Mexico. Additionally, “mutual” tariffs will come into effect on dozens of other countries on Wednesday. China is facing the toughest collection at at least 54%, and will fight back yesterday at its own expense on US goods. Hope for a response from the EU next week.

Trump argued that the economic pain caused by tariffs was short-term and would ultimately be justified by the boom in the US economy, but news of the measure hit investors hard. The Benchmark S&P 500 was closed yesterday near Bear Market territory, with analysts warning of an increased risk of a recession.

Jerome Powell, head of the US Federal Reserve, yesterday offered a somewhat grumpy outlook on the growth outlook, warning of price increases he found to be more than temporary.

A lot is happening. DealBook has asked economists, investment researchers and other experts to understand:

How did the new tariffs change the risk of a recession?

We asked: Jason Furman, a Harvard economics professor and former economic adviser to former President Barack Obama.

“The 'known known' tariffs President Trump has announced so far will be deducting about 1 percent points from GDP growth, which could be reduced from about 2 percent this year to something like 1 percent. This is inferred from a standard macroeconomic model based on how it responds to changes in trade stocks and prices.

“The question is how big is the 'unknown unknown'? Consumer confidence is rising rapidly, business uncertainty has been recorded, asset prices are all falling, all of which are only going in one direction for growth, and when there is a recession, it becomes these intangible perceptual factors. ”

Other Views: In a memo entitled “Boot Book,” JPMorgan's chief economist raised the odds of a global recession from 40% on Thursday to 60%. “The effects of this tax hike could be widened, through retaliation, slides of US business sentiment and disruptions in the supply chain,” he writes.

Will US tariffs open opportunities to China?

We asked: Gabriel Wildow is a Chinese political risk expert at the advisory firm Teneo.

“Exports have been a boon for the Chinese economy in recent years, but now we need to rely on domestic demand to generate growth. However, a decline in access to the US economy forces US allies like Japan and South Korea, once in a steady harmony with Washington's efforts to contain China.

“President Trump believes that tariffs will force global companies to invest in US production, but this incentive may be overwhelming by the perception among global companies that investment in the US currently carries a high degree of political risk.

“I have heard from foreign companies operating in China that government officials are more accessible than ever to meet meetings. At these meetings, these officials are highly solicited and often directly instruct them to deal with complaints brought by foreign companies.

Other Views: Trump is targeting not only China, which faces at least 54% tariffs, but also many alternative routes, such as Vietnam and Cambodia.

“If a nation cannot escape tariffs, I wonder whether global supply chains will be drawn back to China, where manufacturing economy is too attractive.”

“There is a slight chance that tariffs will drive China and the EU closer, the second-largest consumer market. Gianna Smiarek wrote in the era that “there is even greater the chance that this moment will tear the EU and China even more.”

How long does it take for a manufacturer to pivot its supply chain?

We asked: Erin McLaughlin, Senior Economist on the Conference Committee and former vice president of Private Resources for the Council of the American Engineering Company.

“It could require manufacturers anywhere in months to years. They will grade the supply chain in response to tariffs. This includes whether upstream and downstream suppliers can accommodate long processes of domestic production and environmental approval, the complexity of the products being manufactured, factory permits, design, construction and equipment.

“Modern manufacturing facilities include high-tech features such as robotics that guide specialized processes. A much more refined advancement than the 20th century. Companies usually order such customized capital equipment years ago.

“And of course, new manufacturing facilities need money to build and operate. Therefore, additional challenges regarding market uncertainty, such as high-cost financing, inflation and availability of qualified labor, are also considering decisions to raise supply chains.”

Other Views: Apple's long-standing work to shift production of several products from China highlights the challenges facing companies in responding to changes in trade policy. But even though many economists and business leaders say they are skeptical that it is even possible to revive US manufacturing, some U.S. industries are keen on tariffs.

Tariffs are considered inflation. Does that mean the Fed has cut interest rates this year?

We asked: David Seiff, Chief Economist of Nomura's developed market.

“We've come to one from zero FED cuts this year, so we've sourced the number of cuts we're actually expected. But all we did was move forward a few months before we had previously expected in 2026. I think the Fed will remain stable until December 2025.

“Ultimately, we believe that the increase in inflation rates from these tariffs is important and we expect core PCE to exceed 4.5% year-on-year in 2025. We believe this inflation will be prioritized over FRED growth.

“We mainly moved forward with the Fed timing as they are set up to hit at once instead, step by step, meaning that inflation hits will be sharper, but that will also be shorter.

Another view: Morgan Stanley has not been cut this year. After yesterday's blowout job report, the futures market concluded four cuts by the end of the year. In his first public comment since Trump announced tariffs on Friday, Fed Chairman Jerome Powell said tariffs were at risk of higher inflation and slower growth than initially expected, and that “it's too early to be the right path for monetary policy.”

Is this the end of globalization?

We asked: Ian Bremmer, a global strategist who founded the Eurasian group and Gzero Media.

“Globalization has been drifting for some time now. The US was a bystander who promoted the unique industrial policy the world saw in both Trump and Biden. However, until the day of liberation, the US had not actively rewind it. World leaders and businesses still relied on economic cooperation.

“But it's safe to say that the age of globalization has officially ended. Just like the British after Brexit, on a global scale, we are a new era. Even if a country could cut its deal with the US in the short term, it will try to free itself of risk from America's volatility and higher prices in the long run.

Other Views: Flexport CEO and Founder Ryan Petersen, who manufactures supply chain logistics software, told DealBook that Trade survived events such as Ward Wars, Black Death, colonialism, and colonialism, claiming that “all of these things were far more destructive than we've ever lived.” He believes there will be more trade in ten years.

World Trade Organization Director Ngozi Okonjo-Iweala said yesterday that Trump's tariffs “could lead to an overall contraction of around 1% of global commodity trade this year, representing a downward revision of almost four percentage points from previous forecasts,” she said, “we are deeply concerned about this decline and the possibility of escalation.”

Thank you for reading! See you on Monday.

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