As that August 1 deadline draws near, exporters around the world—including right here in Canada—are trying to figure out what the new tariffs by Donald Trump will mean. These tariffs, already responsible for some significant disruption to industries, are made worse by the massive subsidization of China’s domestic industries. As a result, the private sector is left hanging out to dry, putting a hold on investment and hiring decisions while wading through this foggy mess.
Since taking office, Trump has announced over 20 separate tariff agreements. These agreements include Sweden, Norway, Iceland, Korea and take including the European Union, Japan, Indonesia, Vietnam and the Philippines with tariff rates between 15 and 20 percent. His approach has been fairly brutal, warning Brazil that they will receive a mind-boggling 50 percent tariff. Further, he has threatened 30 and 35 percent duties on our other biggest trading partners, Mexico and Canada. Amidst all these developments, Trump has promised that negotiations with China and India are almost done.
The Impact of Trump’s Tariffs on Global Trade
The new, skyrocketing tariff rates on the imports from China highlight the erratic and often nonsensical nature of Trump’s trade policies. Under the initial tariff rate of 20 percent, a scenario would look like this. It then exploded to a staggering 145 percent before finally leveling off at 30 percent. This inconsistent policy environment has created uncertainty for U.S. and foreign companies alike, preventing them from making long-term investments and planning for the future.
European steel exports just hit by a 50 percent tax under Trump’s tariffs. This ill-timed tax is a significant new burden, given the recent changes in the industry. Businesses of all types are under pressure, resulting in a freeze on hiring and investment plans. Robert Rogowsky described the situation succinctly, stating that there is “lots of commotion, lots of claim, lots of activity and lots of b******,” highlighting the confusion and uncertainty surrounding these trade measures.
Vina Nadjibulla noted that “now that the initial shock and anger [at Trump policies] has subsided, there is a quiet determination to build resilience and become less reliant on the US.” Her sentiment is the start of a wave from exporters who recognize they are in a new trade environment and need to recalibrate.
Canada’s Response to Tariff Challenges
For example, Canada, faced with the stiff costs of U.S. tariffs, is aggressively pursuing inter-provincial trade barriers. Concurrently, the country is seeking out new opportunities for exports. Canadian exporters have a big opportunity in Asia with the successful export of liquefied natural gas (LNG). Overcoming this challenge allows them to diversify their markets and broaden their audiences. Canadian Prime Minister Justin Trudeau’s government is trying desperately to mend fraying ties with China and India. They appreciate that these public-private partnerships are more important than ever, particularly in light of current U.S. trade policies.
Tony Stillo emphasized the importance of maintaining trade with the U.S., stating, “It would be foolhardy not to provide to the US, seeing as it’s our largest market, but it makes us more resilient to provide to other markets as well.” Whatever the impetus behind this strategy, it’s a savvy move to sidestep regulatory hurdles in today’s complicated international trade landscape under Trump’s aggressive tariff policy.
Mary Lovely pointed out that global observers are closely monitoring how these tariffs affect the U.S. economy, noting that “if we see a slowdown, as we expect, it becomes a cautionary tale for others.” She hopes the status quo can inform nations as they rethink their approaches to trade. Instead, let this moment serve as a much-needed call for reflection and growth.
The Future of Trade Relations
What’s more, experts are still split over the long-term effects of Trump’s tariffs. While some consider them an effective tool to force other countries to level the playing field on trade, others warn of the unintended economic consequences. Rogowsky described Trump’s approach as “TACO tariffs,” or “Trump Always Chickens Out,” suggesting that his policies may not yield the intended results.
Moreover, Mary Lovely warned that “they’re witnessing this attempt to strong-arm the rest of the world, but it doesn’t seem to be working.” As countries grapple with Trump’s unpredictable trade tactics, they are exploring ways to de-risk their economies and reduce overreliance on both the U.S. and Chinese markets.
Vina Nadjibulla captured the essence of this moment in global trade by stating, “We’ve entered a period of global economic alignment with the reintroduction of industrial policies.” This change is an important sign that countries are adjusting their economic priorities in response to the new global reality.
