Nournews: Donald Trump, the president of the United States, launched a fresh trade war by announcing new tariff policies. The tariffs imposed by Trump will be applied to 185 countries except Russia. The goal of this policy is the reduction of the U.S.’s trade deficit and countering what Trump describes as “unilateral economic surrender.” Will this policy be in favor of the U.S., or will it create a new challenge in the world’s economy?
The reasons and goals for Trump’s tariff war
Trump has been complaining about the lack of trade balance between the U.S. and other countries. He particularly emphasizes that China and the European Union have harmed the economy of the U.S. through their protective policies and the imposition of heavy tariffs on American goods. According to the presented data, China imposes a 67 percent tariff on imports from the U.S., while the U.S. counter-tariff is only 34 percent. The European Union has imposed a 39 percent tariff on American goods, while the U.S. counter-tariff is only 20 percent. Taiwan imposes a 64 percent tariff on American imports, while the U.S. has set a 32 percent tariff on Taiwanese goods. India’s tariff rate on American goods is 52 percent, while the U.S. counter-tariff on Indian goods is only 26 percent. South Korea also has a 50 percent tariff on American goods, while the U.S. has imposed a 36 percent tariff on South Korean goods. Additionally, Indonesia, Cambodia, and Bangladesh have imposed 64 percent, 97 percent, and 74 percent tariffs on American goods, respectively, while the U.S. counter-tariffs on the goods imported from these countries are 32 percent, 49 percent, and 37 percent, respectively.
Reactions of the international markets
The imposition of new tariffs can have far-reaching economic implications. In the short term, this can lead to an increase in import costs for American companies that obtain their basic goods and raw materials from the targeted countries. On the other hand, the counter-reaction of countries to these policies can lead to a drop in U.S. exports and push some industries into recession. In line with this, China and the European Union will probably respond by imposing new retaliatory tariffs, which will intensify global trade tensions.
Aftershocks of new American tariffs against the world
Reuters reported that following the signing of Trump’s executive order and the imposition of new tariffs, Alphabet's and Alibaba’s stocks dropped by 3 percent and 3.9 percent, respectively. Additionally, following Trump’s tariff announcement, the price of American crude oil increased by 1 percent. Tesla’s stock (owned by Elon Musk) rose by 3.4 percent after Trump announced a 25 percent tariff on cars. The Bitcoin market also experienced a serious drop, with the price of Bitcoin falling from 88,000 dollars to 83,000 dollars.
Domestic implications for the U.S.
One of the main concerns regarding Trump’s tariffs is their effects on American consumers. An increase in tariffs usually raises the costs of imported goods, which affects consumers and domestic industries. For example, automakers that rely on spare parts may face higher production costs, which, in turn, could lead to higher car prices in the domestic market. Additionally, some export-reliant industries, like agriculture, may experience a reduction in demand from other countries. For example, China, in response to previous tariff policies, reduced its purchase of American crops, causing serious harm to American farmers. After the announcement of new tariffs on imports from 185 countries, Axios reported that the U.S. Senate intends to vote against Trump’s order regarding tariffs on Canada.
World reactions to Trump’s new tariffs
The announcement of Trump’s new tariffs has triggered a wave of reactions worldwide. Many world leaders and officials have taken a stand against this action. The Prime Minister of Australia described the decision as wrong and unjustifiable, with potentially irreparable consequences for international trade. The Foreign Minister of Ireland expressed regret over the decision, describing it as a tension-escalating move in global economic relations.
The Prime Minister of Italy stressed the need to prevent an extended trade war and called for a diplomatic solution to resolve the crisis. The Prime Minister of Canada harshly criticized Trump’s trade policies and announced that these tariffs will fundamentally change the world’s trade order and could potentially reduce economic growth in export-dependent countries.
British officials announced they are trying to manage the impact of this policy by adopting a cautious approach and examining various options. The President of Sweden also stated that his government has examined the situation thoroughly and will make a decision based on Sweden’s long-term economic interests.
Will this policy be fruitful?
History shows that trade wars do not benefit any party. Tariffs may increase government revenues in the short term, but in the long term, their negative effects become visible in global supply chains and the U.S. domestic economy. Although Trump seeks to boost domestic production and reduce reliance on imports, this approach may cause American companies to struggle with issues such as shortages of basic materials and rising costs.
NOURNEWS