The ‘Phony War’: Tariffs as prelude to a US recession

Friday 30 May 2025 @ 12:20
Chatham House

EXPERT COMMENT

The tariff war launched by US President Donald Trump has entered a phony war stage. But the next six months will reveal the true impact of a threatened trade war.

The 8-month period in 1939–40 after Hitler’s invasion of Poland but before major Nazi attacks on the Allies was called the ‘phony war’.

It was a time of high uncertainty but relative calm, with a hope in some quarters that the worst risks had been avoided. Today, the pace of the tariff war launched by US President Donald Trump on ‘Liberation Day’ seems to be following the same trajectory. The reaction of ‘shock and awe’ at the pace of action during Trump’s first hundred days culminated with the 2 April announcement of ‘reciprocal tariffs’ imposed on friends and foes alike.

The president used executive orders as his legal tool, and Truth Social as his personal communications channel, to dominate the news and evade normal checks and balances.

His new tariff regime threw financial markets into a panic and threatened complex global supply chains. A tit-for-tat escalation of tariffs on China added fuel to the fire.

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Original article link: https://www.chathamhouse.org/2025/05/phony-war-tariffs-prelude-us-recession

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