This episode features Claire Jones, the Financial Times' U.S. economics editor, discussing the one-year anniversary of President Trump's Liberation Day tariff announcement on April 2nd, 2026. The conversation examines the economic impacts, policy uncertainties, and global ramifications of what became the largest change in trade policy for the world's biggest economy in nearly a century.

Jones analyzes why economist predictions of economic devastation didn't materialize, how the Supreme Court's intervention affected policy implementation, and the ongoing tensions between fiscal benefits and consumer affordability. The discussion also covers the Federal Reserve's response, international impacts particularly on China, and how current geopolitical events like the Iran war are reshaping economic priorities.

Economist Concerns and Market Volatility

Economists were unhappy with the tariff calculation methodology, which didn't follow traditional tariff policy paths and created significant uncertainty that spooked both economists and markets.

The volatile reaction in stock indices and bond markets reflected the fundamental dislike of uncertainty among economists and market participants.

Economic Impact vs. Predictions

This represented 'pretty much the biggest change in trade policy and the world's largest economy for getting on for pretty much 100 years' with unprecedented tariff rate jumps since World War II.

Despite broad economist consensus that tariffs are harmful and predictions of destroyed U.S. growth, the negative impact was 'not quite as bad as a lot of people feared' - Claire.

The tariffs failed to accomplish Trump's goal of creating significant manufacturing jobs, partly due to lack of strong industrial policy and business uncertainty from changing policies.

Federal Reserve officials now classify tariffs as a 'one-off shock' that caused some price increases but hasn't seeped into the broader economy, allowing focus to shift to Iran war impacts.

Fiscal Benefits and Global Impact

Tariffs provided clear fiscal advantages through customs revenue collection, helping the U.S. deficit situation and improving how rating agencies judge American finances.

The biggest fear centered on U.S.-China relations when tariffs reached 135-145% on Chinese goods, creating 'a de facto embargo on Chinese exporters sending goods to the US.'

Those extreme China tariffs 'fell back quite quickly,' making the outcome 'a lot less bad than people had feared' from a global economy perspective.

Supreme Court Intervention and Political Consequences

The Supreme Court struck down many IEPA tariffs, but economists don't expect relief because 'the administration... seem very intent' on using other mechanisms to maintain tariffs.

The general view among economists is that 'tariffs in some shape or form are here to stay' despite the Supreme Court verdict.

Tariffs have worsened affordability pressures during an existing cost-of-living crisis, with Claire noting they're 'hitting Americans in the pocket at a time when they're very sensitive to the price of things.'

The political impact may hurt Trump in polls 'even if US growth remains broadly okay' because tariffs haven't improved economic perceptions compared to the Biden administration.