Why this could lead to trade wars with China and Europe and how it will affect Ukraine – writes RBK-Ukraine. This is reported by Kontrakty.UA.
Why Trump threatens to raise import tariffs in the USA
During Trump's election campaign, a key slogan was "Make America Great Again." He argued that the country's economy is in decline and that cheap goods from China and other countries make domestic production unprofitable. Additionally, this leads to an increase in the trade deficit of the USA with China and other nations.
The solution, according to Trump, lies in making imported goods more expensive through high import tariffs, thus making domestic products more attractive for companies in the medium term.
Other countries view the imposition of tariffs as hostile actions and are prepared to respond. This exchange of economic blows is what is referred to as "trade wars."
What Trump and his team plan
Trump implemented such a policy during his first presidential term, when tariffs on Chinese goods were imposed at rates of 7.5%-25%, depending on the product category.
Joe Biden, upon becoming president in 2021, maintained most of the tariffs imposed by his predecessor on China. However, this time Trump, if he returns to power, may further increase the tariffs.
"The likelihood is very high because, if you look at global trade overall, as part of globalization, it seems that globalization is currently not benefiting the USA or the EU; it is benefiting China and those rapidly growing countries that are taking on the roles of global economic leaders. Because this trend does not suit the USA and has started to work against it, Trump wants to take steps to raise tariffs," said Ivan Us, chief consultant at the Center for Foreign Policy Studies of the National Institute for Strategic Studies, to RBK-Ukraine.
The new U.S. Secretary of Commerce will be directly responsible for implementing the tariffs. Trump has already chosen Howard Lutnick for this position. He is a 63-year-old billionaire investor and CEO of investment firm Cantor Fitzgerald, but he lacks experience in diplomacy or public service.
Trump may raise import tariffs at the beginning of 2025, averaging by 38%. However, for different products, they could range from 15% to 60%. This is the consolidated opinion of over 50 economists surveyed by Reuters from November 13 to 20.
"Almost 40% is a high figure, but considering Trump's unconventional approaches, I do not rule out that this will happen, at least regarding China with a high probability," Us said.
At the same time, Trump faces a strong deterrent factor concerning the tariff increases. During the election campaign, he actively criticized Biden and Harris for the sharp rise in consumer goods prices during their tenure. According to polls, this is one of the main concerns for Americans.
In the short term, raising tariffs will lead to an even greater increase in prices for imported goods. According to modeling by the analytical center Third Way, the introduction of a 15% tariff would raise American families' grocery costs by 14%. Therefore, Us stated that the possible consequences will be calculated for each individual tariff.
Moreover, Trump has historically used tariffs as a means of pressure in political negotiations, not necessarily imposing them. Conversely, countries against which tariffs will be imposed may retaliate with similar measures on American goods.
What will be China's and the EU's response
During Trump's first presidency, China was caught off guard by the imposition of tariffs. Now, the country's leadership is better prepared for a possible trade war, although the introduction of tariffs will still lead to a slowdown in China's economic growth, Reuters noted.
China has adopted a "foreign sanctions law," allowing it to impose restrictions in response to "actions by other countries." Additionally, there is a "unreliable entities list" for foreign companies that supposedly undermine the national interests of the country. All of this will allow China to at least negotiate with the USA regarding trade tariffs.
For the European Union, the introduction of new trade tariffs will also have negative consequences. According to estimates from the Institute of German Economy (Institut der deutschen Wirtschaft), if Trump imposes tariffs at a level of 20% on EU countries, and the EU responds with similar actions, the GDP of the eurozone could decrease by 1.3% in 2027 and 2028. Germany will be particularly affected, with its GDP falling by 1.5%.
At the same time, the GDP of the USA will decrease by 1.3% in the case of 10% tariffs and by 1.5% in the case of 20% tariffs in 2025.
Back in October, the EU prepared a list of American goods that may be subject to tariffs if Trump imposes tariffs on European imports, Bloomberg reports. However, the imposition of tariffs by the EU is not yet a base scenario and will only occur in response to corresponding actions from the USA.
How trade wars could affect Ukraine
For Ukraine, the direct impact will be minimal due to the small volumes of bilateral trade.
"First of all, it may affect certain Ukrainian products supplied to the United States. However, since these volumes are insignificant and our main markets are the European Union, Asia, and Africa, I do not think it will be substantial," Us noted.
At the same time, a resurgence of trade wars may lead to significant fluctuations in global prices for goods that Ukraine exports, the expert said. This primarily concerns agricultural products, and it could play either positively or negatively for Ukraine, depending on how other countries respond to U.S. trade tariffs.