Trump's trade tariffs: A chaotic gamble with uncertain gains
In terms of international trade, since the 1980s, Donald Trump has viewed the USA as a victim of economic globalization, according to Dr. Rafał Szymanowski from Adam Mickiewicz University in Poznan. The expert suggests that the tariffs announced by the U.S. president may not yield the expected results.
During Donald Trump's initial month in office, economic globalisation slowed, assessed Dr Rafał Szymanowski from the Faculty of Political Science and Journalism at Adam Mickiewicz University and the Poznań-based Institute for Western Affairs. He remarked, "What Trump announced and is pledging regarding international trade may incite a revolution."
With respect to international trade, Trump is very consistent and, since the 1980s, has largely seen the USA as a casualty of economic globalisation. His primary contention is the U.S. trade deficit, particularly with the EU, which he accuses of employing unfair practices against the USA, he stated.
He added that the tariffs imposed by the USA are meant to exert pressure on international policy, reduce the trade deficit, and encourage companies to invest back into production within the United States.
"A lot of chaos"
The expert emphasised that, at present, there is considerable chaos in the U.S. trade policy. "Trump initially announced a 25% tariff on products from Canada and Mexico, only to later suspend it. It's unclear why he didn't achieve much beyond mere promises. However, the announcement of a 25% tariff on, among other things, European pharmaceuticals or cars, could severely impact leading EU countries, Germany and France," he observed.
The researcher recalled that during his first presidency, Trump also enacted tariffs. "He imposed them to enhance the U.S. trade balance. However, in the case of relations with China, he was unsuccessful. Between 2016 and 2019, the U.S.-China trade deficit decreased from approximately £255 billion to £253 billion. Those tariffs didn't accomplish anything. Later, in 2020, the deficit shrank, but that was due to the COVID-19 pandemic and the disruption of supply chains. The tariffs didn't bring about what Trump claimed he wanted to achieve," he noted.
No chance of success
The academic added that all econometric models indicate that Trump's notion of compensating for reduced tax revenues with higher tariffs is unlikely to succeed. "There is a significant risk that the cost of tariffs will essentially fall on American consumers, who will end up paying more," he pointed out.
Since the end of World War II, tariffs have predominantly been declining globally, he noted.
He further added that in the event of a trade conflict between the EU and the USA, Europe might align more closely economically with Canada. In his view, the free trade agreement between the EU and South American countries associated with Mercosur will not entirely compensate for the losses incurred in the American market.
The researcher refuted that Trump's policy could swiftly revitalise significant industries in the USA. "Closing a large factory of one of the significant global corporations can take 3 to 4 years. You can't shut down a factory in a single day, and opening a new one in a different location involves finding a site, negotiating land prices, constructing the facility, hiring staff - it all takes time," he explained.
He added that the decline in industry in the USA is not solely attributable to international trade and globalisation but also to technological progress and reduced employment needs while maintaining a similar scale of production.
How the world reacts to Trump
Dr Szymanowski pointed out that no indications suggest that U.S. trade moves could trigger a global recession. He added that paradoxically, with Trump's new term, European stock exchanges have gained, which may be perceived by investors as more stable markets.
