The Invisible Sword of Damocles - How Trump's Tariff Policy Shakes the World Economy

Economic reality knows no patriotic slogans, no national anthems and no campaign stagecraft. It follows sober laws that operate as relentlessly as gravity. Whoever ignores them risks not only his own downfall but drags entire economies down with him. This is exactly what is emerging under Donald Trump's trade strategy: a tariff regime unprecedented in its force since 1933 - and whose consequences even conservative economists classify as highly dangerous. The numbers revealed by our current research speak a clear language. The average US tariff rate has skyrocketed to 18.6 percent, driven by flat import duties of 10 percent as well as targeted punitive tariffs on metals, electronics, vehicles and consumer goods. In the short term, this means price increases that every American family will feel: metals are up by as much as 41 percent, clothing by 36.6 percent, agricultural products by 31.5 percent. Anyone buying a car today must expect almost 13 percent higher costs - a price explosion that massively hits the middle class in an already tense phase of inflation. But the real explosive power lies not only in the price shock, but in the long-term shifts of global supply chains. When the US artificially makes itself more expensive, corporations switch to cheaper markets. For the world economy this means chaotic adjustments, supply bottlenecks, a domino effect across entire industries. While consumers in the US suffer, those states in Asia that can quickly serve substitute markets benefit. Producers in Vietnam, Malaysia and Mexico are already reporting a demand boom - a classic boomerang effect that paradoxically deepens America's dependence on foreign suppliers instead of reducing it.

Experts such as the economists at the Yale Budget Lab have been pointing out for months that tariffs in the 21st century no longer behave like they did at the time of the Great Depression. Back then, protectionist isolation could still strengthen national industries - today production processes are so globally intertwined that a break at one point immediately reverberates worldwide. A smartphone, for example, contains components from over twenty countries. A tariff on microchips not only makes the final product more expensive, it acts as a catalyst for disruptions in logistics, innovation and the labor market. There is also the political dimension. Trump sells his tariff policy as a shield for American workers. But in reality it proves to be a disguised tax that primarily hits consumers. Unlike classic corporate taxes, this burden cannot be avoided - every purchase in the supermarket, every shirt, every new washing machine carries the invisible levy within it. Thus an economic policy instrument turns into an ideological project that creates the appearance of strength at the expense of the broad population. Our analysis shows: the short-term price increases may partly be offset by new sources of supply, but even in the long run a markup of an average of 17.3 percent remains. Economists distinguish here between the short-term effect - the immediate price shock after the introduction of tariffs - and the long-term effect, which only becomes visible after adjustments in the supply chains. Even if the costs ease somewhat in the long run, a structural surcharge remains that permanently burdens consumption and growth. This means that the purchasing power of American households structurally declines - a circumstance that eats like a silent poison through consumption, investment and growth.

The Federal Reserve faces a dilemma: if it lowers interest rates to support consumption and production, it risks fueling inflation further. If it keeps interest rates high, it chokes off the economy. Thus Trump has created a scenario that resembles an economic sword of Damocles: every decision will be costly, every reaction risky. Whoever speaks of "America First" risks ending up with "America Last" - a country whose companies are weakened internationally by higher costs, whose citizens groan under rising prices and whose political credibility as a champion of free markets erodes. The global dimension must not be underestimated. Europe is already responding with countermeasures, Asia is building its trade architecture beyond the US, and even traditional partners such as Canada and Australia openly speak of "strategic decoupling." Instead of creating a strong, sovereign economy, America is increasingly isolating itself in a self-chosen fortress whose walls are made of tariffs - and whose foundation is crumbling with ideological illusions. It is this picture that our research reveals: an economic strategy shaped less by reason than by political calculation, a risky game with the purchasing power of millions of people and the stability of world markets. History teaches that protectionism has rarely brought prosperity - and has always carried the price of division, uncertainty and loss of trust. That is exactly where America stands today.

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