US' Tariff Wars: Intentions, Strategy, and Global Impact

The world is witnessing the opening volley of a highly significant shift in tariff and trade policies, marking the beginning of profound changes in global economic dynamics. Fresh off his election victory, Donald Trump wasted no time reclaiming the White House spotlight, launching an assertive and hard-hitting trade agenda.

Throughout his campaign, Trump repeatedly promised a first day filled with “shock and awe”, and he delivered just that on day one, January 20, with the ‘America First Trade Policy’ memorandum outlining a plan to prioritise US economic and national security interests, evidence of a much larger trade strategy in the pipeline. The memo asks federal agencies, including the Secretaries of Treasury, Commerce, and the United States Trade Representative, to “investigate the causes of our country라이브 바카라 large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits”.

China: Front and Centre of Trump라이브 바카라 Trade Policy

A lot of what the Trump administration is doing, even when it looks like it is directed at other countries, is targeted at China. The memo highlights trade with China, starting with a review of the Phase One agreement from Trump라이브 바카라 first term and suggesting tariff modifications to address unfair trade practices. It calls for a new investigation into discriminatory actions by China and stricter oversight of intellectual property rights. Additionally, the Trump administration supports Congressional efforts to revoke Permanent Normal Trade Relations (PNTR) with China. Investigations under the ‘America First Trade Policy’ memorandum are set to conclude by April 1, 2025, and reciprocal tariffs will take effect starting April 2.

Mirroring the dynamics of a military conflict, the US-China trade war has escalated into a new phase, an extension of the long-term strategic competition between the US and China. The underlying goal for Trump라이브 바카라 desired trade actions is reshoring critical industries to the US, through tariffs targeting both allies and adversaries. The trade deficit with China has long been a focus of US political attention. By strengthening trade barriers, the US hopes to raise export costs for Chinese companies, diminishing their competitiveness in global markets, slowing China라이브 바카라 rise in high-tech industries, and revitalising domestic production through reshoring.

These actions are reshaping global supply chains, heightening financial market volatility, and raising critical questions: How will escalating economic tensions redefine global trade? Is the push for supply chain ‘de-risking’ gaining momentum? Could Southeast Asia, India, and Mexico rise as dominant manufacturing hubs? Are global markets and financial systems bracing for an impending shockwave?

Which Way Does the Compass Point to?

Reciprocal and retaliatory tariff measures have intensified to such an extent that it has become near impossible to discern which action triggered the other.

On February 11, President Trump issued an executive order, raising steel and aluminium tariffs from 10 per cent to 25 per cent, reinvigorating the 2018 tariffs aimed to protect US industries by addressing Chinese overcapacity and boosting domestic production. Previous exemptions for countries with which the US has security arrangements have been removed, to prevent tariff evasion and re-routing of aluminium and steel by China. Reinvigorating the Section 232 tariffs on steel and aluminium—given their short-term success in the earlier phase may seem like a blunt approach—but the latest tariff adjustments aim to close loopholes and address past shortcomings. The executive order specifically mentions “Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union (EU), Ukraine, and the United Kingdom had received exemptions, which prevented the tariffs from being effective”.

As of March 12, the US imposed a 25 per cent tariff on steel and aluminium imports from the EU. Others, such as proposed tariffs on Canadian and Mexican goods, have faced delays or modifications. The EU announced retaliatory tariffs on $28 billion worth of US goods, set to begin in April 2025. It would be interesting to see if Team Trump opens the door to allies getting some exclusions later on, or if they are going to hold the line on this.

In response to the EU라이브 바카라 proposed 50 per cent tariff on American whiskey, which itself was a retaliatory measure against US tariffs on steel and aluminium, the Trump administration has threatened further tariffs, including a 200 per cent tariff on European wines and spirits.

A 10 per cent ad valorem duty was imposed on February 4, covering most imports from China. This rate was increased to 20 per cent on March 4, as part of measures addressing trade and national security concerns; others are still under review or negotiation. Proposed actions include the possibility of significant port fees on Chinese vessels docking at US ports, possibly as high as $1.5 million per ship.

Over concerns about tariff evasion and the influx of low-value shipments from Chinese e-commerce platforms, especially Temu and Shein, the administration also eliminated the “de minimis” trade exemption that allows duty-free shipments of goods valued at $800 or less. For now, a temporary reinstatement has allowed businesses to adjust while the government works on implementing stricter oversight.

The Chinese government swiftly implemented countermeasures, filing a complaint with the World Trade Organization (WTO) alleging that the USA라이브 바카라 unilateral tariff increases constitute trade protectionism, disrupting the global free trade order. The Chinese government emphasised that allowing the US to act unchecked would encourage more countries to follow. China라이브 바카라 strong response indicates that Beijing will not stand idly by, but choose to defend its economic interests through reciprocal retaliation.

The WTO라이브 바카라 dispute settlement mechanism has typically taken years to deliver a final ruling in similar trade lawsuits. Despite this lengthy process, China hopes to demonstrate its position to the international community and seek support from other major trading partners such as the EU and Japan to exert diplomatic pressure on the US.

Beijing also imposed retaliatory tariffs ranging from 10 per cent to 15 per cent on various American products, including agricultural goods like soybean, pork, and wheat, high-tech equipment, and energy products. These tariffs were strategically targeted to impact key American industries. China also released an updated export control list blacklisting 15 American companies and restricting their business operations in the Chinese market, further escalating trade tensions.

China has announced that it would implement a 15 per cent tariff on coal and liquefied natural gas products as well as a 10 per cent tariff on crude oil, agricultural machinery and large-engine cars imported from the US, negatively affecting American energy companies like ExxonMobil and Chevron.

On a broader scale, the economic competition between the US and China has evolved beyond a mere tariff war, involving reshuffling of the global industrial chain as the two nations steadily move toward decoupling.

India라이브 바카라 Position in the Post-Tariff Global Economy

The tariffs on India are part of the ‘reciprocal tariffs’ policy, set to take effect on April 2. India has some of the highest tariffs in the world, and while it has made selective tariff cuts on high-end American goods like bourbon whiskey, luxury cars, and motorcycles, Trump is demanding more.

New Delhi and Washington are currently negotiating a bilateral trade deal, and the Trump administration라이브 바카라 trade policies give India a reference point to evaluate what kind of market access it wants, and if it is able to receive favourable concessions under the Free Trade Agreement (FTA). India holds a strong negotiating position in the generic medicines market, with the US relying on India for 50 per cent of its generic drug imports. Imposing high tariffs would considerably raise drug costs, placing a heavy burden on American citizens.

Trump라이브 바카라 tariff war could have mixed implications for India. On the one hand, it might attract investments as companies look to diversify supply chains and reduce reliance on China, positioning India as an alternative manufacturing hub. On the other, heightened global trade tensions and uncertainty could deter investors, especially if India doesn’t address its own trade barriers and infrastructure challenges. The outcome largely depends on how effectively India capitalises on the shifting dynamics.

Push to Rethink Supply Chains

The new tariffs are designed to accelerate derisking strategies that the US has been pursuing in recent years, by prompting companies to reevaluate their supply chains and shift production capacity away from China.

Any conversation about geopolitical trade economics moving from now into 2050 will centre around where the next chip fabs are going to be built. After initially threatening a 100 per cent tariff on Taiwan라이브 바카라 semiconductor imports, Trump라이브 바카라 announcement that the Taiwan Semiconductor Manufacturing Company (TSMC) would bring in a fresh $100 billion investment into the US that involves building five additional chip facilities, is also emblematic of reinforcing the broader reshoring trend.

Electronic products are a major battleground in the US-China trade war. Tariffs have increased costs for upstream supply chain items like semiconductors, electronic components, and printed circuit boards (PCBs) by 10-15 per cent, affecting not only US companies but also suppliers in South Korea, Taiwan, and Southeast Asia. The 50 per cent tariff on Chinese semiconductors, including legacy chips, while aimed at reducing reliance on Chinese imports, creates immediate challenges for US semiconductor firms, directly affecting the sales of key US players such as Nvidia, Micron Technology, Intel Corporation and Qualcomm. These tariffs have driven up raw material costs, particularly in industries like automotive, aerospace, machinery, and chemicals. Tesla, for instance, which previously relied on China라이브 바카라 supply chain for cost efficiency, now expects an 8-12 per cent rise in production costs, potentially leading to higher electric vehicle prices in the US market.

China라이브 바카라 countermeasures send a strong signal to the global market that the tariff wars will further intensify, with US companies set to face greater competitive pressure in the short term. Global market volatility will continue to intensify, particularly in the agriculture, technology and the energy sectors.

As global trade tensions rise, countries may increasingly turn to regional alliances to secure stable trade relationships and seek deeper integration within blocs like the Association of Southeast Asian Nations (ASEAN), the EU, or partnerships among emerging economies, like countries in the BRICS grouping. However, the extent of this shift will depend on how nations adapt their trade strategies and whether they prioritise collaboration over competition.

An analysis by the US Office of Economic Policy suggests that the new tariffs introduced in 2025 could lead to a significant reduction in US dependence on Chinese imports, estimated at 15 per cent to 20 per cent. However, there is concern that this policy could lead to higher prices for US consumer goods, potentially intensifying inflationary pressures and impacting low-income households. The real outcome impact will depend on how effectively these policies are implemented and whether alternative supply chains, such as those in Southeast Asia, India, or Mexico, can meet US demand without causing disruptions or cost increases.

With ‘Make America Great Again’ (MAGA) at the core of its political strategy, Team Trump leverages trade wars, which enjoy notable public support, particularly among voters in traditional manufacturing states. These voters often perceive China라이브 바카라 economic rise as a threat to the US working class. By adopting a tough trade policy towards China, the Trump administration aims to reaffirm its ‘America First’ stance and solidify the Republican voter base ahead of the 2026 Congressional midterm elections.

For now, though, the ripple effects of this trade conflict have caused significant global market volatility and disrupted financial markets worldwide, resulting in sharp fluctuations across major stock indices. Increased investor risk aversion has driven gold prices to record highs, and the rally is fuelled by factors such as central banks, including China, continuing to buy gold, and investors shifting away from equities due to market volatility.

Trade wars, protectionism, and shifting power dynamics will have profound implications for the international trade system, accelerating global economic fragmentation and impacting globalisation itself. Despite the recent signalling towards a compromise, the essence of the tariff war is a struggle for dominance in the global economic system. So even with short-term agreements, conflicts could erupt at any time, making trade wars a normalised competition pattern.

(Views expressed are personal)

Vaishali Basu Sharma is a security and economic affairs analyst

This article is a part of 바카라's April 1, 2025 issue 'World At Reset', which explores the ongoing changes in the global geopolitical order. It appeared in print as 'Exchange Rate'.