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Trade Tensions Rise As Trump Announces Tariff Hikes

Tue 26 Nov 2024 ▪ 4 min read ▪ by Luc Jose A.
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The American economic policies are entering a new phase of confrontation. Donald Trump, at the dawn of his new presidential term, announces protectionist measures that revive trade tensions with several key partners. This project, which is part of a resolutely nationalist vision, could disrupt global trade relations. Between explicit threats and concrete measures, this initiative stands as a turning point in international exchanges, affecting nations as diverse as China, Mexico, and Canada.

Zoom sur des mains de Trump signant un document avec des chiffres énormes en rouge représentant des tarifs douaniers.

A rise in customs duties

Starting from January 20, 2025, Donald Trump plans to sign decrees that will impose a spectacular increase in customs duties. “This tax will remain in effect until drugs, especially fentanyl, and all illegal immigrants stop this invasion of our country,” he stated on his Truth Social network. Thus, this measure will directly impact Mexico and Canada, with a 25 % increase on all products exported to the United States. As for China, already at the center of the tensions during his first term, it will face a 10 % increase on its imports, accompanied by potential additional tariffs that could reach 60 % for certain strategic goods.

These decisions, justified by arguments of national security and the fight against illegal immigration, mark a return to aggressive trade policies. The stated objective of reshoring production to the United States, however, raises concerns among economic partners. Indeed, the immediate reactions from Canada and Mexico oscillate between appeasement and caution. Ottawa reminds its crucial role in the energy supply of the United States, while Mexico adopts a posture of downplaying.

International reactions and global implications

This economic offensive goes beyond the American continent. The European Union has quickly positioned itself, and indicates that it is “ready to react” to potential repercussions on its exports. Furthermore, the arrival of Howard Lutnick, a controversial figure and a fierce critic of China, at the head of the Department of Commerce reinforces fears of a hardening of trade negotiations. This appointment illustrates Washington’s intent to exert maximum pressure to obtain favorable concessions.

The markets, for their part, are already reacting. The US dollar has strengthened against the Mexican peso and the Canadian dollar, reflecting expectations of a regional economic shock. Wendy Cutler from the Asia Society Policy Institute specifies that these measures constrain the United States’ neighbors, bound by free trade agreements, to reconsider their strategy in face of a partner with tough methods. The prospect of an imminent renegotiation of the agreement in 2026 could exacerbate this dynamic.

These announcements mark the beginning of a new chapter in international trade relations. While the stated objective of protecting American interests may appeal to some of the electorate, the long-term consequences remain uncertain. The risks of retaliation, escalation of tensions, and economic isolation could weigh on the global economy. Donald Trump’s return to radical trade policies poses a critical question: how far is the American administration willing to go to impose its vision?

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.