Trump Goes Crazy on Trade: “Liberation Day” is even worse than expected

Just a quick update after Trump’s Rose Garden speech.

I guess it’s just possible that when we get details about the Trump tariffs they will be lower than what he just announced, but based on what he said, he’s gone full-on crazy. It’s not just that he appears to be imposing much higher tariffs than almost anyone expected. He’s also making false claims about our trading partners — not sure in this case whether they’re lies, because he may be truly ignorant — that will both enrage them and make it very hard to back down.

Basically, he’s claiming that the rest of the world is placing very high tariffs on U.S. products, and that he’s imposing “reciprocal” tariffs that are only half what they impose on us. Here’s the chart he showed:

The left column show the tariffs others are supposedly charging on US products — and it’s completely crazy. Focus on the European Union. The EU, like the United States, has generally low tariffs; the average tariff it charges on US goods is less than 3 percent.

U.S. President Donald Trump shows an executive order on "reciprocal tariffs" at the Rose Garden of the White House in Washington, D.C., the United States, on April 2, 2025. (Xinhua/Hu Yousong)

So where does this 39 percent number come from? I have no idea. Many people speculated that Trump would count value-added taxes as tariffs, even though they aren’t — European producers selling to the EU market pay the same VAT as US producers, so it doesn’t discriminate and therefore isn’t protectionist. But even if you get that wrong, EU VAT rates are in the vicinity of 20 percent, so you still can’t get anywhere close to 39 percent.

You have to wonder whether Elon Musk’s Dunning-Kruger kids are now producing tariff numbers.

But you know that having once claimed that Europe charges tariffs more than 10 times as high as reality, Trump will never drop that claim. I don’t know how many people noticed, but he’s still claiming that we’re subsidizing Canada by $200 billion a year. Aside from the basic mistake of claiming that a Canadian trade surplus means that we’re somehow subsidizing Canada, he’s inflating the actual trade surplus by a factor of three. Many, many people have pointed out the error, but Trump is sticking with it, the same way Musk is sticking with the millions of dead Social Security beneficiaries thing.

If you had any hopes that Trump would step back from the brink, this announcement, between the very high tariff rates and the complete falsehoods about what other countries do, should kill them.

By Paul Krugman

Professor, CUNY Grad Center, Nobel laureate and former columnist, NY Times

https://substack.com/@paulkrugman

Editor's note: The article reflects the author's opinions and not necessarily the views of Sino-Carib News.

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