In the wake of President Trump’s threat to slap a 50% tariff on all European Union imports (he has delayed it till July 9) alongside his promise of punitive levies on tech giants, America stands at a crossroads between political posturing and economic prudence. What may play well on the campaign trail risks opening the Pandora’s box in boardrooms from Detroit to Dublin. As the Federal Reserve adopts a wait-and-see stance amid sticky price pressures, the real test will be whether policymakers choose spectacle over stability, or whether common sense prevails in preserving the world’s most dynamic economy.

Trump’s gambit to impose 50% duties on EU goods unless Brussels unilaterally slashes its own tariffs reflects a long-held conviction that trade deficits are the scourge of national prosperity. Yet deficits in goods trade tell only half the story when the US boasts a services-surplus exceeding €200 billion with the EU. This is akin to ignoring the forest for the trees. By focusing solely on merchandise, one overlooks the vast services economy that fuels more than three-quarters of US GDP.

It is an old adage that ‘empty barrels make the most noise,” and in Trump’s tariff theatre, the loudest clamour often comes at the expense of nuanced economic........

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