Cliff Notes
- An analysis of the Cold War’s economic impact revealed that the “Iron Curtain” represented a tariff equivalent of 48%, suggesting serious trade restrictions may arise amid current geopolitical tensions.
- Current and proposed tariffs between the US and China could reach levels comparable to the Iron Curtain, raising concerns about significant trade disruptions as businesses prepare for potential chaos.
- The US trade deficit has doubled in the past year, driven by importers rushing to stock up before tariffs kick in, countering the intended economic impact of the tariffs.
Trump trade war: Why a figure of 48% is important as escalation nears | Money News
Here is a number to lodge in your brain in the coming weeks and months: 48%.
Last year a group of economists carried out an an analysis on the economic impact of the Iron Curtain; how much trade actually took place from east to west in spite of all the restrictions during the Cold War. They came to the conclusion that, at its height in 1951, “the Iron Curtain represented a tariff equivalent of 48%”.
As the world limbers up for what what Donald Trump calls his “liberation day”, that figure is worth keeping in your mind.
Politics latest: PM rejects ‘knee-jerk’ response to tariffs
Right now, the average dutiable rate of tariffs on China is somewhere between 30% and 40%. But in the event that the president imposes another 20% of tariffs on China, the level of tariffs between these two trade partners will rival or possibly exceed those Iron Curtain levels.
No one is sure what will happen next. What number will the president choose for his next round of tariffs? 10%? 20%? Or the 25% rate he has favoured for steel, aluminium and cars? Will the next round of tariffs announced this week be imposed on every country? Will they just be imposed on the so-called “dirty fifteen” the Treasury Secretary has talked about? Who, for that matter, are the “dirty fifteen”?
We don’t know the answers to these questions. Nor do other world leaders like Keir Starmer. Nor, for that matter, do many in the White House, it seems.
