Donald Trump has promised to impose tariffs on imported goods as part of his economic agenda in his second term. While China stands to be punished the hardest, other countries, including U.S. allies, are also set to be impacted.
The president-elect ran on a pledge to use tariffs to boost American businesses, with up to 60 percent duties on Chinese goods and up to 20 percent on imports from other countries.
Although all tariff policies will need approval from Congress, many economists have already begun speculating on the impact they will have on the global market.
“While (Trump’s tariff policy) stands to affect the trade relationship with China more intensely, it is expected to affect trading relations with the EU as well,” Dr. Rishav Bista, associate professor of economics at Texas Christian University, told Newsweek.
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Donald Trump has promised to impose tariffs on imported goods as part of his economic agenda in his second term. While China stands to be punished the hardest, other countries, including U.S. allies, are also set to be impacted.
The president-elect ran on a pledge to use tariffs to boost American businesses, with up to 60 percent duties on Chinese goods and up to 20 percent on imports from other countries.
Although all tariff policies will need approval from Congress, many economists have already begun speculating on the impact they will have on the global market.
“While (Trump’s tariff policy) stands to affect the trade relationship with China more intensely, it is expected to affect trading relations with the EU as well,” Dr. Rishav Bista, associate professor of economics at Texas Christian University, told Newsweek.
Similarly, Edward M. Feasel, president and professor of economics at the Soka University of America, told Newsweek: “If President Trump carries through on his promise of higher tariffs across the board, and even higher with China, there will definitely be an impact on exports and GDP [gross domestic product] in the economies of our allies and others.”
He added: “They are much more reliant on exports as a source of demand than the U.S. is. Other G7 countries’ exports to GDP ratio are above 30 percent, while the U.S. is around 11 percent.
“In general, people forget exports are a source of demand for countries around the world and have helped generate economic growth and prosperity throughout modern history.”
Some scenarios show that Europe could suffer more than China. One model published by The Financial Times and Allianz Trade shows that Europe would be the worst affected in a “contained trade war” where the U.S. hikes tariffs on China to 25 percent on half of noncritical U.S. imports, and to 5 percent for the rest of the world, excluding Canada and Mexico.
In this scenario, European nations would be forecast to lose a combined total of $38.6 billion in 2025 and 2026, compared to Chinese losses of $34.2 billion.
In the event of a “fully-fledged trade war” scenario, with 60 percent tariffs on Chinese goods and 10 percent on all other nations, the model suggests China would lose an estimated total of $125.3 billion in 2025 and 2026, while Europe would lose $124.8 billion.
Read more at Newsweek.com
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