A seismic shift in global trade has been triggered by the implementation of President Donald Trump’s unilateral 10% tariff on all imports from many countries, sending shockwaves around the globe and sparking a strong reaction from affected nations.
The world of international trade has experienced a seismic shift with the implementation of President Donald Trump‘s unilateral 10% tariff on all imports from many countries. This move, which took effect at US seaports, airports, and customs warehouses on Saturday, marks a significant departure from the post-World War II system of mutually agreed tariff rates.
In 2018, President Donald Trump introduced tariffs on imported goods from several countries, including China, Canada, and the European Union.
The tariffs were imposed to protect American industries and workers, particularly in the steel and aluminum sectors.
The initial tariffs were set at 25% for steel and 10% for aluminum, with some exceptions for certain countries and products.
The move was met with criticism from trade partners, who argued that the tariffs would lead to retaliatory measures and harm global trade.
The initial 10% ‘baseline’ tariff has sent shockwaves around the globe, with global stock markets plummeting and investors fleeing to safer assets. The tariffs have also sparked a strong reaction from countries affected by the new levies, including Australia, the UK, Colombia, Argentina, Egypt, and Saudi Arabia.
The imposition of tariffs by the United States has significant economic implications for both domestic and international trade.
According to a study, every 1% increase in tariffs leads to a 0.5% decrease in global trade volume.
The US tariffs impact also affects consumer prices, with a 10% tariff on imported goods resulting in an average price increase of $100 per household.
Furthermore, the tariffs have led to retaliatory measures from trading partners, exacerbating the economic effects.
The US Customs and Border Protection bulletin indicates that no grace period has been provided for cargoes on the water at midnight on Saturday, while cargo loaded onto vessels or planes and in transit to the US before 12.01am ET on Saturday will be eligible for a 51-day grace period.
In addition to the initial 10% tariff, higher ‘reciprocal’ tariff rates of 11% to 50% are due to take effect at the same hour on Wednesday. European Union imports will be hit with a 20% tariff, while Chinese goods will be subject to a 34% tariff, bringing Trump‘s total new levies on China to 54%.
The US-China trade relationship has been a complex and contentious issue for decades.
The two nations have been engaged in a series of trade disputes, with the US accusing China of unfair trade practices, intellectual property theft, and currency manipulation.
In 2018, the US imposed tariffs on $50 billion worth of Chinese goods, prompting 'a significant escalation' of the trade tensions, according to experts.
The tensions escalated in 2020, with the US imposing additional tariffs on $200 billion worth of Chinese goods.
According to a report by the Peterson Institute for International Economics, the trade war has cost both countries billions of dollars in lost trade and economic growth.
The Trump administration has announced several exemptions and exclusions from the tariffs, including crude oil, petroleum products, pharmaceuticals, uranium, titanium, lumber, semiconductors, and copper. These goods are valued at $645bn in 2024 imports and will not be subject to the new levies.
The Trump administration is also investigating several of these sectors for further national security tariffs, including energy, steel, aluminum, cars, trucks, auto parts, and other industries.
- theguardian.com | Trump tariffs come into effect in ‘seismic’ shift to global trade
