Countries worldwide are swiftly adapting to the new business landscape with the US, following Donald Trump’s introduction of specific tariffs that may trigger a global trade war.
Trump has outlined his objectives with these tariffs: to reinstate manufacturing in the US; to address unfair trade practices by other nations; to increase tax revenues; and to encourage crackdowns on migration and drug trafficking.
In response, both the EU and China have promised counteractions, while South Korea has pledged an “all-out” reaction. The political fallout with allies, such as the UK, could also have its own repercussions, as billions are lost in economic growth.
Here are some key takeaways following Wednesday’s extensive announcement:
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1. Businesses are preparing for the implications of ‘liberation’
The US president promoted the concept of global tariffs with a sense of celebration, fulfilling his campaign promise to free the nation from inflated prices. He asserted that “prices are way down” since his return to office, but anyone who has shopped for groceries recently may beg to differ.
American companies are uneasy about the broader consequences of this initiative: they caution that increased costs will be passed onto consumers. “Feedback from businesses of all sizes, across various sectors, indicates that these sweeping tariffs are effectively a tax increase that will inflate prices for American consumers and harm the economy,” stated Neil Bradley, chief policy officer at the US Chamber of Commerce, a corporate lobbying organization.
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2. Is there a connection to China?
China has been significantly affected by the new tariffs, raising the total duty on Chinese imports to over 50%, alongside struggling nations in Southeast Asia, including conflict-stricken and earthquake-affected Myanmar.
One hypothesis suggests that nations with significant Chinese investments are being targeted. Dr. Siwage Dharma Negara, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, stated: “The [Trump] administration believes that by hitting these countries, they can affect Chinese investments in places like Cambodia, Laos, Myanmar, and Indonesia. By targeting their products, it may impact Chinese exports and the economy.”
“The true target is China, but the repercussions for those nations will be considerable, as this investment generates jobs and export income.”
These tariffs come as many Southeast Asian countries are already dealing with the aftermath of USAid cuts, which provide humanitarian aid to a region vulnerable to natural disasters and support pro-democracy movements against oppressive regimes.
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3. Major trading partners Canada and Mexico are exempt – but still face consequences
Canada and Mexico have been exempted from the most recent tariffs; however, as Prime Minister Mark Carney and business leaders pointed out, 25% tariffs on Canadian steel, aluminum, and automobiles were instituted just hours after Wednesday’s announcement.
Carney cautioned that while Trump has maintained key aspects of the bilateral relationship, the global tariffs announced earlier that day “fundamentally alter the international trading landscape.”
Both countries have already been impacted by pre-existing 25% tariffs on various goods related to border control and fentanyl trafficking issues, as outlined by the White House.
Mexican President Claudia Sheinbaum indicated on Wednesday that her nation would not engage in a “tit-for-tat on tariffs,” opting instead to reveal a “comprehensive program” on Thursday.
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4. This is a significant risk
Trump seems willing to accept that this announcement may create considerable market upheaval globally, stating recently: “There will be a transition period, as what we are doing is monumental.” The universal tariffs are set to take effect on April 5, with reciprocal tariffs starting on April 9, providing nations very limited time to determine their course of action. Some may seek to negotiate with Trump, while others could employ retaliatory tariffs; however, a prevailing theme will be uncertainty.
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5. No one is spared
Heard Island and McDonald Islands, some of the most isolated locations on the planet inhabited only by wildlife, have been included as “external territories” of Australia subjected to a 10% tariff.
Norfolk Island, situated just off Australia’s eastern coast, faces a tariff of 29%—19 percentage points higher than the rest of Australia—prompting Prime Minister Anthony Albanese to remark on Thursday: “I’m somewhat puzzled that Norfolk Island, with respect to it, is a trade competitor with the vast economy of the United States, but this illustrates that nowhere on earth is safe from this.”
