If the warnings are confirmed, they would mark the biggest increase in trade barriers since the 1930s, when protectionism triumphed.
The trade war has already begun. It is in the statements and threats of Donald Trump. Although the American president, the leader of the nationalist and populist right, has decided to wait a few weeks, the line has already been crossed and the objectives have long been announced: the destruction of the economic order that has regulated international economic relations for decades, despite numerous tensions. This international order, based on liberalization, is being replaced by the “America First” doctrine, without distinction between allies and adversaries, all accused of benefiting from the United States. In fact, as Donald Trump has said: “Allies are often worse than rivals when it comes to trade.”
The destruction of every multilateral pact or organization based on cooperation, starting with the World Trade Organization (WTO), is being pushed forward by Trump, with a team of loyal collaborators, made up of early protectionists and advisors later converted to this ideology.
Everyone is convinced that tariffs are effective. As a negotiating tool, as a form of pressure to secure political and economic concessions. Or as a defense of the American economy, to support the growth of industrial production and that of the “Made in USA” brand. However, history and recent experiences suggest the opposite. Some pragmatists in the administration are also aiming for fiscal benefits, hoping that the new tariffs will bring additional revenue to the federal budget, thus allowing interventions in other areas, including tax cuts for higher-income groups, something promised in the campaign.
China is the first target of the Trump administration’s trade tariffs. However, the most ambitious and controversial measures have been imposed, or threatened to be imposed, on traditionally US-friendly countries such as Denmark and Panama, due to Trump’s desire to take control of Greenland and the Panama Canal; or, like Canada and Mexico, to renegotiate trade agreements and strengthen policies on immigration and the fight against drug trafficking; as well as all steel and aluminum imports, including from the European Union, which have been labeled as unfair trade practices against the US.
Global tariffs are also in the pipeline on other strategic sectors, from automotive to pharmaceuticals. The Trump administration is poised to hit billions of dollars in US imports, without worrying about the risk of triggering economic retaliation and a dangerous escalation of the global crisis.
TRUMP AND THE TARIFF STRATEGY
“Tariffs are a beautiful thing, the greatest thing ever invented,” Trump repeats with determination. Compared to his first experience in the White House, when he waited at least a year to analyze and rethink his strategy, this time the US president is acting much more quickly. And he is proudly wearing the title “Tariff Man”.
FIRST MEASURES ADOPTED
Trump has announced 25% tariffs on all imports from Mexico and Canada, the two main US partners in the North American Free Trade Agreement (NAFTA). He has suspended these measures until March to test whether these countries will fulfill promises to strengthen measures against illegal immigration and drug trafficking. Trump has also imposed 50% tariffs on China, which affect at least $400 billion in consumer goods, adding to existing tariffs from his first term. In addition, he has announced 10% tariff increases on steel and aluminum imports, starting March 2. The total value of the new tariffs imposed on Mexico, Canada and China amounts to nearly $300 billion a year, according to Goldman Sachs analysis, compared with the $80 billion that the US currently collects from all its customs duties.
MUTUAL TARIFFS AND RECIPROCITY
Trump has not stopped there. He has instructed his administration to impose reciprocal tariffs on all trading partners, analyzing other countries’ tariff barriers, taxation policies, such as high VAT in Europe, or incentives for domestic industry, which the US considers discriminatory. His plan is to create a “reciprocity index” for the US, which will take into account all these barriers and impose tariffs accordingly.
Reports on the plan are due by early April, and the tariffs could go into effect as early as April, according to a White House statement. Meanwhile, Trump has also threatened Colombia with tariffs for its refusal to accept the forced return of migrants from the U.S. He has also threatened Denmark with tariffs if it refuses to give the U.S. control of Greenland.
A THREAT TO THE GLOBAL ECONOMY
Economists and historians see Trump’s tariff offensive as a shock event, with warnings of consequences not seen since the Great Depression of the 1930s. The International Monetary Fund (IMF) predicts that a 10% overall tariff increase between the US, China and the EU would reduce global GDP by 0.4 percentage points by 2026. The Peterson Institute for International Economics predicts that a universal 10% tariff on all imports would reduce US real GDP by 0.9% and increase inflation by 1.3 percentage points by 2026.
American families would lose $2,600 a year due to rising prices and falling purchasing power. “These tariffs would hurt the economy, productivity, wages and economic growth,” warns a report by the Tax Foundation, adding that they would disrupt US economic and security alliances.
THE CONSEQUENCES OF TARIFFS ON THE AMERICAN ECONOMY
Studies on the tariffs imposed by Trump in his first term show that they: Had no positive effect on American industry. The steel and aluminum industry lost $348 billion because the tariffs increased the cost for companies that used these materials; The tariffs on washing machines created 1.800 new jobs, but forced every American consumer to pay $92 more for a washing machine; The revenue from the tariffs did not cover the losses from the tax cuts, creating a new deficit for the government.
PROTECTIONIST POLICY AND TRUMP’S TEAM
Trump has assembled a powerful team of protectionists around him, including Howard Lutnick, a former Wall Street banker who is now Commerce Secretary; Peter Navarro, an ardent tariff supporter and author of “Death by China,” and Scott Bessent, the Treasury Secretary, who is trying to balance tariffs with softer policies on international trade. The far-right populist influence has also grown in the Trump administration, with figures like JD Vance and Oren Cass arguing that tariffs are a means to revive American industry and that their negative impact should be seen as an acceptable sacrifice for the national economy to recover.
While the US has a trade deficit of $918 billion a year, Trump’s protectionism could trigger an unprecedented economic war, raising tensions not only with China but also with traditional allies such as the EU and Canada. Experts warn that if the tariffs are implemented at the scale threatened by Trump, the global economy could suffer a major shock, increasing inflation and international economic uncertainty.
