Nournews: These remarks, along with his previous threats about the imposition of heavy tariffs on imports from Europe and China, indicate his general strategy of exploiting economic and military tools to advance political and trade goals. These remarks come at a time when global markets are experiencing intensified fluctuations caused by tariff policies, economic sanctions, and a lack of international security.
Tariff policies have been on the rise globally, but they intensified during the second term of Donald Trump’s presidency. By imposing sanctions on imports from various countries, including China and the European Union, Trump supported the United States’ domestic industries against foreign competitors. These policies were met with rapid retaliatory reactions by major economic powers, which in turn led to intensified trade restrictions and increased global tensions in the economic sector.
The European Union also reacted to these policies, announcing that in order to support its domestic industries against the impacts of U.S. tariffs, it would adopt protective measures. Retaliatory approaches led to instability in global trade. According to reports by the Global Trade Alert, trade restrictions in G20 countries have increased by 75 percent since the beginning of Donald Trump’s presidency. Also, more than 20 percent of U.S. export products have been exposed to import restrictions. Changes in trade policies have raised serious concerns about economic growth and international cooperation. Estimates by Finch Agency show that if Trump’s threats are executed, the average U.S. tariff rate may reach 18 percent, the highest level in the past 90 years. These developments indicate major shifts in global trade policies, which are considered serious threats to free trade.
Impacts of the Smoot–Hawley Tariff Act on global trade
During the 1930s, customs tariffs were known as the main factor in the global trade crisis. During this time, the global economy was on the verge of dismantling, and a major economic crisis that had engulfed the United States and many other countries led to a recession and expanded unemployment.
The Smoot-Hawley Act, an attempt to support American crops and industries against foreign competitors, paved the way for increasing customs tariffs on imports to the United States by 20 percent. Reacting to these policies, many major economic countries also increased their trade limitations.
After World War II, particularly in 1947, the U.S. and about 20 other countries signed the General Agreement on Tariffs and Trade (GATT) with the aim of reducing trade obstacles and contributing to global economic rebuilding. The agreement led to a decrease in tariffs among major countries in such a way that the average rate of tariffs was reduced from 22 percent in 1947 to about 14 percent in 1964 and then to 3 percent in 1999.
In 1995, the World Trade Organization (WTO) replaced the agreement and supervised the global trade order. Such developments contributed to the enforcement of international trade and the reduction of prices in favor of consumers.
In 1995, the World Trade Organization (WTO) replaced GATT, overseeing the global trade system. These developments strengthened international trade and contributed to lower prices, benefiting consumers worldwide.
Increase in tendency towards trade protective measures
Pressures are on the rise to impose further tariffs in order to support strategic industries against China, particularly in sectors such as electric cars and semiconductors. The United States is trying to increase its production capabilities in these sectors and, at the same time, reduce its imports.
Meanwhile, Russia’s war in Ukraine and the United States’ requests for European countries to increase their participation in covering defense costs have significantly led to an increase in military expenses, strengthening attempts to achieve economic self-reliance in Western countries.
Neil Shearing, the senior economist at Capital Economics Institute, has said that the dominant approach regarding economic integrity between the United States and European countries has become outdated, and now governments are seeking more economic authority. Furthermore, returning to past levels of trade freedom is facing challenges. Weakening the role of the World Trade Organization, particularly because of obstacles created by the United States in 2019 in the process of selecting judges for the Court of Appeal, has complicated this process.
In the end, these developments show deep changes in the international economic and political system. The increase in protective policies, intensification of trade conflicts, and military threats have revealed a new face of international competition. The implications of such policies will be significant for both the U.S. and China. Changes in the balance of economic power and the increasing tendency of countries to support domestic production have driven the future path of world trade in an unknown direction. Trump’s trade policies and their expanded impacts on international relations are still among the main topics for analysts and policymakers worldwide.
NOURNEWS