President Donald Trump is radically altering U.S. international economic policy. He says the pain from his high tariffs is worth the long-term job gains, but his proposed reciprocal tariffs would accelerate inflation, slow growth and could prove his undoing.

He wants to impose country- and product-specific tariffs that match foreign tariffs, subsidies, regulatory barriers, unfair currency advantages and value added taxes that limit U.S. exports.

Compiling such country-specific schedules is difficult, but the most important data is accessible. Foreign tariff schedules—the United States charges 2.5% on automobiles, the European Union 10%—value added taxes and other border taxes are published.

According to the World Bank, the Purchasing Power Parity exchange rate that would approximately equate costs for goods in China and America is about 3.81 yuan per dollar, not the current 7.25 market rate. This implies the average tariff-equivalent disadvantage for U.S. exports into China is not the average ad valorem duty of 3.1% but rather, 93.4% plus any of the generous subsidies and discriminatory regulations Beijing applies to boost competitiveness.

U.S. Customs already designates countries of origin and product classifications to apply tariffs — for most goods, free if from free-trade-agreement countries, most-favored-nation rates for World Trade Organization members, special country and company product-specific rates according to trade actions such as subsidy and dumping countervailing duty orders or a general schedule whose rates often date back to Smoot-Hawley.

Reciprocal tariffs would be a repudiation of U.S. trade policy since the Reciprocal Trade Agreement Act of 1934 and be the clearest yet U.S. violation of the WTO foundational rule that members charge imports from other members no more than their negotiated, bound MFN tariff rates.

The 1930 Smoot Hawley Act raised the average U.S. tariff to 45%, attracted wide foreign retaliation and likely worsened the Great Depression. Subsequently, the Roosevelt administration sought to negotiate lower tariffs and in recent decades, the United States has maintained some of the lowest tariffs.

On agricultural products, U.S. tariffs on dutiable imports average 5%, whereas for India it’s 39%.

Three things are important.

First, high tariffs won’t solve the trade deficit.

The trade deficit is determined by the U.S. savings shortfall. We sell Treasuries and other securities abroad, which is mirrored in the trade gap, because the sum of U.S. household and corporate savings don’t cover U.S. government borrowing and business investment.

Second, as the reserve currency, the dollar enjoys strong demand and when evaluated against World Bank PPP rates is generally overvalued. Along with higher foreign MFN bound tariffs, that implies Trump’s reciprocal tariffs computed in the manor described above would impose a major increase in the U.S. tariffs, whose burden history teaches would be shared by both foreign producers and U.S. consumers through higher prices.

Peter Navarro, the influential White House trade advisor, tells us these tariffs should not prove terribly inflationary. In his first term, Trump boosted tariffs on Chinese goods from 3.1% to 19.3% with a small impact on the inflation.

However, prior to COVID, globalization kept inflation tapped down and inflation expectations were low, whereas now businesses are scrambling to adjust supply chains to new geo-political tensions.

The nation is struggling with inflation that peaked at 9% in June 2022 and still lingers at about 2.8%. Radically higher reciprocal tariffs would apply to imports from most countries, not just China, and boost already elevated household inflation expectations.

If the average tariff is increased to 20%, we could count on inflation closer to 4% than 2%.

Consider the price of a Japanese car with an import tariff, recalibrated for the undervaluation of the yen at 60%.

Navarro believes foreign automakers view the U.S. market as so critical they would eat these tariffs. Automakers and parts suppliers currently have profit margins of only 6% or 7%.

Trump campaigned on bringing prices down. He won’t stay popular much longer if tariffs raise the price of cars by a third and inflation generally.

Third, U.S. manufacturers are as dependent on imports as Amazon and Target.

They can’t get along without imported semiconductors, computers and the like—it’s simply too expensive to make all the components of a modern automobile or most anything else solely with U.S. parts.

Manufacturers would likely bring some component production home and switch among foreign sources to find the lowest applied U.S. tariffs. The uncertainty of Trump’s policies—are tariffs for revenue and hence permanent or just to extract concessions—adds to business risks dampens investment and slows growth.

Developers are writing into leases escalator clauses that raise rents if certain tariffs are imposed.

The McKinley tariffs and subsequent revisions were similar in scale and followed by a terrible recession from 1893 to 1896.

Trump’s reciprocal tariffs are a prescription for stagflation that would torpedo his credibility with voters.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.