Trump’s trade war is approaching its stage one endgame. A typical trade deal takes about 18 months to negotiate, so we are still early in this mess, but nearly four months out from Trump’s tariff announcement that changed the world forever, some rubber is starting to meet the road. After meandering around and imposing tariffs that imploded the stock market, Trump peeled back parts of his aggression to varying degrees in past weeks as he promised expansive trade deals by deadlines he kept delaying. His latest one is August 1st, and all those “TARIFF LETTERS, and/or Deals” that were definitely “deals” going out a few weeks ago have stopped. I wonder why!
Trump is now saying that “We’re gonna be setting a tariff essentially for the rest of the world, and that’s what they’re gonna pay if they want to do business in the United States, because you can’t sit down and make 200 deals.” After Howard Lutnick said there would be no more negotiating delays, the US and China recently agreed to extend talks another 90 days. So much for the King of Deals.
Trump is making some deals though, just not the expansive ones he’s imagining in his melting brain. He made a firm deal with Japan to back off his threat to raise tariffs to 25 percent and still raise them to 15 percent, as Japanese Prime Minister Shigeru Ishiba said this was about “achiev[ing] a reduction in tariffs on automobiles and auto parts without quantitative restrictions, ahead of the rest of the world.” Trump claimed that $550 billion would be invested by Japan in America “which will receive 90% of the Profits” without any evidence or anyone having a clue what the old coot was talking about. He did something similar with Europe this week, agreeing on a firm elevated tariff rate while promising impossible fuels magic and talking about billions of dollars in investments he invented in his head that the EU says they can’t guarantee.
Despite these trade deals existing on a whim that can be changed in one TruthSocial post, we are getting a clearer picture of what Trump’s 19th century economic regime looks like. Right now it’s one where American automaking is crushed by the weight of president deals’ bad math. Tell me consumer, would you rather buy a $20,000 car made in Japan or Europe with a 15 percent surcharge added? Or a $20,000 car made in America with parts sourced in Canada and Mexico that are 25 percent more expensive? This dynamic that anyone who passed first grade math knows will benefit foreign automakers seems like it will remain in place, as Trump recently threatened Canada with a 35 percent tariff and said “We haven’t really had a lot of luck with Canada. I think Canada could be one where there’s just a tariff, not really a negotiation.”
The Yale Budget Lab (YBL) has done great work tracking the math produced by this madness, and their latest analysis with the new EU and Japan rates included found that “Consumers face an overall average effective tariff rate of 18.2 percent, the highest since 1934. After consumption shifts, the average tariff rate will be 17.3 percent, the highest since 1935.” Ernie Tedeschi, Director of Economics at the YBL, wrote that “The 2025 tariffs disproportionately affect clothing and textiles, with consumers facing 39 percent higher shoe prices and 37 percent higher apparel prices in the short-run. Shoes and apparel prices stay 18 percent and 17 percent higher in the long-run respectively.”
Tariffs are a regressive tax, especially in the short-run. The short-run burden on 1st decile households (as a % of income) is >3x that of the top decile (-3.4% versus -1.0%). The average annual cost to the 1st & top decile are $1,300 & $4,900 respectively; median is $2,200.
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— Ernie Tedeschi (@ernietedeschi.bsky.social) July 28, 2025 at 9:43 AM
Trump just made life a lot more expensive for everyone in lower income households, all while giving a big boost to Japanese and European automakers at the direct expense of American ones, and this is not the only industry where he is raising prices for American consumers. Beef prices are at record highs because of the 30 and 35 percent beef tariffs on Canada and Mexico, countries we import billions of pounds of beef from. As The Bulwark notes, “Trump just announced a trade deal that will lift Australian restrictions on importing American beef. To quote Trump, ‘We are going to sell so much [beef] to Australia,’ which, of course, will drive up the price of beef here at home.” Trump’s 50 percent tariff on Brazil in an attempt to violate their sovereignty is driving beef prices up too. There are many products becoming more expensive in the United States right now as a direct result of president deals’ idiotic trade war.
But the economy is like an aircraft carrier turning around in the ocean right now. It takes a while to reposition itself, then it takes a bit longer to actually accelerate up to full speed. The fear with Trump’s tariffs is that they will stick around in the economy and we will see the pain really unfold across 2026 and 2027, the way that prices remained elevated after the 2020 pandemic supply shock that even the Wall Street Journal called greedflation (they think it’s good though).
And these tariffs will be a drag on the economy. We know this because they already are. But also because every study from the Yale Budget Lab to the American Enterprise Institute to the World Bank to my little shop here at Splinter with rudimentary Excel and R skills says that these broad-based tax increases on American consumers will slow our consumer-driven economy. The World Bank slashed its 2025 growth forecast for the US last month, going from a 2.3 percent GDP projection in January (actual GDP growth was 2.8 percent in 2024) to a projection of 1.4 percent now. Their chief economist Indermit Gill wrote that “Global growth prospects have deteriorated. Without a swift course correction, the harm to living standards could be deep.”
To give you an idea of how deep, GM beat analyst expectations last quarter and still saw its net income decline by 35 percent because of Trump’s tariffs. The regime can talk all it wants about Trump’s delusion that would fail him out of any economics 101 class anywhere on earth, but costs do get passed down to consumers, and major companies like GM and Walmart are proving it. Trump’s agreement with two of our largest trading partners has now burdened Americans with the largest tariff rate since the one that deepened the Great Depression, and it is currently structured in a way that benefits foreign corporations at the expense of domestic ones, and especially the American consumer. Shitshow is too kind of a word for this trade war. And it still has only just begun.
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