**Trump’s Tariffs Risk Disaster, While Bipartisan Russia Strategy Offers Hope**
In a recent move that has sparked widespread concern, US President Donald Trump announced new “reciprocal” trade tariffs on various countries. However, these tariffs are not only ineffective in achieving their intended goals but also pose a significant risk to the US economy.
Economists from across the political spectrum have come together to condemn Trump’s decision. Kim Clausing of UCLA notes that the largest tax increase in over 50 years will burden US consumers, while Michael Strain of the American Enterprise Institute points out that these new tariffs will decrease manufacturing employment and reduce competitiveness. Doug Holtz-Eakin also weighed in, stating that the methodology behind calculating the tariff rates is indefensible.
The consensus among these experts is clear: Trump’s latest tariffs represent an impending national disaster.
**A Better Way Forward**
Just a day before Trump’s announcement, 50 senators from both parties, led by Republicans Lindsey Graham and Democrat Richard Blumenthal, proposed a bipartisan tariff bill aimed at pressuring Russia to seek genuine peace with Ukraine. This proposal is sensible and has the potential to have a real impact without necessarily passing the House.
By imposing tariffs on countries that import oil from Russia rather than directly on Russia itself, this approach would put pressure on Moscow without causing unnecessary economic disruptions. Moreover, the threat of congressional action alone can be enough to get the Kremlin’s attention.
**A Nobel-Worthy Solution**
Glenn Hubbard and Catherine Wolfram, experts in international trade and sanctions, have proposed a simple yet brilliant strategy for putting pressure on Russia. By imposing sanctions on any company or individual involved in Russian oil and gas sales, Moscow would need to pay a per-shipment fee to the US Treasury. This “Russian universal tariff” (RUT) would start low but increase every week that passes without a peace deal.
This approach has several advantages. First, it targets Russia’s significant source of dollar revenue – fossil-fuel exports worth around $600 million per day. Second, it uses existing commercial tracking systems to monitor and enforce compliance. Finally, it creates a clear incentive for Moscow to negotiate in good faith.
**A Win-Win Scenario**
Trump’s administration badly needs a win on the international stage to boost American prestige and convince investors that the US is still a reliable partner. A slightly improved version of the bipartisan tariff proposal – one that imposes real costs on Russia – would do exactly that.
In this scenario, Russia could be pressured into serious negotiations, where its removal from the RUT could be part of a deal that ends the devastating invasion and brings lasting peace to Ukraine. If Moscow continues to negotiate in bad faith, the US would still collect billions annually under the RUT, ensuring that Russia defrays some of the costs imposed on others.
**Conclusion**
Trump’s “Liberation Day” tariffs were the culmination of a terrible first two months for his administration on the world stage. A better bipartisan tariff proposal offers hope for a win-win scenario that would put pressure on Russia while boosting American prestige and investor confidence. It is time for Trump to reconsider his approach and adopt a more effective strategy that prioritizes diplomacy over disastrous trade policies.
—
**Simon Johnson, a 2024 Nobel laureate in economics, is a former chief economist at the International Monetary Fund. He is a professor at the MIT Sloan School of Management.**
Read More @ kyivindependent.com