Economists have been wrong about Trump's tariffs- so far

I had a post a few days ago about the Economist saying that the US economy is defying gloom. I had a post with my own analysis earlier in which I had argued that Trump was winning the tariff war- on X, the article evoked harsh comments and I was branded a Trump admirer. 

When economists say the US economy will crash or the world economy will crash on account of Trump's tariffs, it is no more than wishful thinking, I'm afraid. They don't like Trump for a variety of reasons  and they would like to see the economy crashing. Well, it ain't happening. The facts on the ground are otherwise.

The Economist acknowledges that six months into Trump's term, things look "surprisingly rosy":

Yet six months on the full reckoning has not arrived. There is no runaway inflation. America’s economy grew by 3.8% at an annualised rate in the second quarter; the Atlanta branch of the Federal Reserve expects similar in the third. Consumers are spending, firms investing and the stockmarket booming. The outlook has also improved elsewhere. In September the OECD lifted its forecast for global growth to 3.2%, up from 2.9% three months earlier.

And it proceeds to explain why:

One reason is that tariffs have been gentler than advertised. In April America’s average rate was estimated to be near 30%; today the same models put it closer to 18%. Mr Trump threatened China with tariffs of 145% but by September was imposing levies at barely a third of that. South Korea’s fell from a promised 25% to 15%. ....

....Carve-outs have blunted the impact further still. Nearly half of America’s imports have been exempted from Mr Trump’s tariffs. Electronics such as smartphones and computers were spared entirely. Brazil’s rate of 50% includes nearly 700 exemptions, trimming it to 30% or so. Canada’s headline tariff of 35% is nearer 6% in practice, according to Scotiabank, a local lender, largely because goods qualifying under the United States-Mexico-Canada Agreement (USMCA) are exempt. Even sectoral levies are riddled with loopholes. Mr Trump’s new pharmaceutical tariffs, announced at 100% and due to take effect on October 1st, excluded generics (which make up 90% of drugs sold in America) and branded firms with investment plans in the country. That day he paused the measures altogether as talks began.

There are other reasons. Firms rushed to front-load imports to beat the tariffs. There seems to be underinvoicing of imports from China; as a result, tariffs paid are much lower for the actual value of goods imported.

Most importantly, trade wars, such as those that erupted after the Smoot-Hawley, have been noticeably absent. Except for China, no country has retailiated seriously against American tariffs. The reason is that many countries find they can diversify exports. America accounts for only 8 per cent of world imports today compared to 20 per cent at the turn of the century. Countries are forging closer trade partnerships with like-minded countries so that there is a large area of free trade after excluding the US. 

The Economist thinks that with Trump spreading the roll-out of tariffs over several quarters, inflation in the US could become persistent. Well, the last month data shows a monthly inflation rate of 0.2 per cent of an annual rate of 2.4 per cent. 

I repeat what I said earlier: Trump is winning for now.