In a sudden shift, former U.S. President Donald Trump announced a 90-day pause on tariffs, which had previously caused significant turmoil in global markets. His decision to impose tariffs initially resulted in over $6.5 trillion in losses for the U.S. stock market, leading to nervousness among investors and economic instability worldwide. Experts quickly criticized the move, with renowned economists like Bismarck Rewane and Paul Krugman warning that trade protectionism would ultimately harm the economy by driving up prices and stifling international cooperation.
Trump’s tariff policies, particularly those targeting over 25 countries, were viewed as ill-thought-out and rushed. Economists have drawn parallels with the “cobra effect”—a term describing a poorly planned policy that ends up exacerbating the problem. The U.S. experienced rising costs, anxiety in business sectors, and a struggling stock market, all of which highlighted the consequences of quick, uncalculated decision-making. The abrupt pause in tariffs, however, does not extend to China, signaling that the trade conflict may be more about geopolitical power than economic fairness.
Critics argue that the broader U.S. strategy of manufacturing goods domestically, driven by Trump’s “America First” rhetoric, fails to account for the higher costs of production in the U.S., such as higher wages for workers. This has led many companies to continue relying on cheaper manufacturing hubs like China, despite the tariffs. The ongoing trade war with China reflects a deeper global competition for economic influence, with the U.S. trying to assert control over the world’s economic systems.
Meanwhile, countries like Nigeria are closely monitoring these developments. The Nigerian population, with its growing tech infrastructure and fintech solutions, sees an opportunity to manage risks and possibly benefit from trade shifts. However, analysts caution that for both the U.S. and developing countries, hasty decisions and lack of preparation for the immediate impacts on citizens can lead to economic pain, highlighting the need for careful policy planning to avoid worsening situations for ordinary people.
Source: Business day