The United States has further increased global trade tensions by imposing tariffs on a wide variety of goods from several different countries. This decision has drawn unprecedented international condemnation from world leaders and foreign affairs experts. Now the European Union has imposed countermeasures by taxing 26 billion euros’ worth of American goods, including many iconic products such as bourbon. This development is a very big deal in terms of international trade relations. The U.S. tariffs hurt nearly all foreign countries including the United Kingdom, Australia, New Zealand, Colombia, Chile, Italy, Mexico, Canada and Brazil. All other items are subject to a 10% tariff, but goods imported from the European Union are subjected to a 20% duties.
The U.S. administration has characterized these tariffs as a necessary response to what it terms “economic warfare” from other nations. In his January 2017 announcement of a national security strategy, President Donald Trump declared that the U.S. would no longer practice “unilateral economic surrender.” He emphasized the need for a strong stance, claiming that “jobs and factories will come roaring back into our country” as a result of these measures.
The U.S. has already unilaterally imposed a 25% tariff on auto imports. Together with the already-announced tariffs on consumer goods, this move further sours international trade relations. In fact, the U.S. has a $2-to-$1 trade surplus with the Australians, having bought $3 billion worth of Australian beef just last year. Yet, this global surplus was not enough to protect Australia from the effects of these new tariffs.
As countries continue to contend with the fallout from these tariffs, some national leaders are pushing for cooler heads to prevail. Todd McClay, New Zealand’s trade minister, said his country will “not retaliate in kind” against U.S. tariffs. He is right in thinking that by doing so we would be adding inflationary pressures and that would be damaging to consumers. “We will not be seeking retaliatory measures. That would raise costs on New Zealand consumers,” said McClay.
Colombia’s President Gustavo Petro took a more critical stance regarding the broader context of global trade policies, asserting that “the neoliberalism that proclaimed free-trade policies all over the world has died.” His comments highlight a bit of the new reality of international trade. Countries are already in the process of rethinking their approaches in light of these events.
These furious responses from affected nations highlight how fragile our international trade relations have become and how quickly tensions can ramp up. For those countries impacted by the U.S. tariffs, their responses are being calculated to avoid ruining their long-term prospects. Analysts like Villa suggest that the hope within European capitals is for a strong enough response to persuade Trump to negotiate and possibly retract some of these measures.
“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response.” – Matteo Villa
Even as Republicans in Congress and industries across the country increasingly warn of damaging economic consequences, President Trump refuses to reverse course. He steadfastly believes these tariffs will help American workers. After all, there’s no clearer way to boost our economy than the restoration of the manufacturing jobs that have disappeared over the last decades.
“Taxpayers have been ripped off for more than 50 years.” – Donald Trump
As countries navigate this new era of trade relations marked by tariff impositions and potential retaliatory measures, many are left wondering what the long-term consequences will be for global commerce. The situation is highly dynamic, and global companies—especially those in international shipping—are preparing for widespread supply chain and cost impacts.
