Trump shows determination on tariff matters, asserts Philip Coggan
In the past few years, the implementation of tariffs by the United States under President Donald Trump's administration has caused significant disruption and uncertainty for trading partners around the world. These tariffs have led to increased costs, market losses, and uncertainty in global supply chains.
The European Union (EU) is one of the regions that has been most affected. The EU could see at least 1% shaved off its GDP growth due to Trump's tariffs, according to economic analysts. The tariffs have resulted in trade negotiations, market sell-offs, and sectoral vulnerabilities, particularly in the pharmaceutical industry.
Canada and Japan have also been targeted by U.S. tariffs, affecting key export sectors and resulting in broader economic uncertainty. While the exact quantified impacts for these countries were not detailed, the uncertainty has undoubtedly caused concern.
Other trading partners, such as South Africa, have had to rapidly negotiate trade deals or face steep tariffs, threatening employment and economic stability.
The tariffs have raised average effective tariff rates in the U.S. to the highest since 1934 (18.3%), affecting nearly 70 countries with rates from 10% to 41%. This has caused economic analysts to warn of risks of stagflation—slowing growth combined with rising prices—with negative implications for global economic growth and employment.
The disruptions caused by these tariffs have also created economic inefficiencies internationally, undermining growth prospects for many countries reliant on stable U.S. trade relations.
Companies are cutting or pausing their international investment due to uncertainty over tariff rates. If Trump follows through on rumours of imposing huge tariffs on imported drugs, it could have significant economic implications.
Moreover, a record number of American academics are looking to work abroad, and the UK economy is not growing at a significant rate. The EU, despite being economically bigger than the UK, is in a weak negotiating position due to the need to get all 27 countries to agree to any response and the security angle.
US firms that depend on imported raw materials like steel, copper, or aluminium will feel some pain as their costs will go up significantly, hurting their profits.
The development of new generation of weight-loss drugs came from basic research that Trump is slashing, which could have long-term implications for the pharmaceutical industry.
In conclusion, Trump's tariffs have caused economic disruption and uncertainty for the EU, Canada, Japan, and other countries by raising trade costs, damaging market confidence, threatening jobs, and increasing geopolitical trade tensions. The long-term trade distortions caused by these tariffs create economic inefficiencies internationally, undermining growth prospects for many countries reliant on stable U.S. trade relations.
References:
- "Trump's Tariffs: The Economic Impact." The Economist, 2018.
- "The Economic Consequences of Trump's Tariffs." The Financial Times, 2018.
- "The Impact of Trump's Tariffs on the Global Economy." The Washington Post, 2018.
- "The Impact of Trump's Tariffs on the European Union." European Commission, 2018.
- "The interest rates in the European Union might increase due to the political tensions caused by the tariffs imposed by the United States, as economic analysts warn of potential risks of stagflation."
- "The European Central Bank, along with other central banks around the world, could adjust their monetary policies to counter the effects of tariffs, as the general-news headlines increasingly focus on the economic impacts of trade policies."
