When Donald Trump announced fresh duties, the American stock exchanges were already closed. Nevertheless, the financial markets reacted rapidly and reasonably unanimously. The future contracts on S&P fell by 1.7 percent, and the Nasdaq index bringing together technology companies by almost 2%. On the another hand, the price of gold increased significantly, exceeding $3,150 (PLN 12 1000 056) per ounce. — Retaliation duties are much more aggressive than everyone thought — claims Tai Wong, an independent metallic dealer.
Not only is he amazed by Trump’s decision, as most economists and business representatives think. And most of them have pessimistic predictions. For 1 thing, Carsten Brzeski, the chief economist of ING, put it most eloquently. “ The 1930s have returned,” he says.
Why did he mention this period? In 1930, then US president Hoover raised import duties on many products under the Smooth-Hawley Act (Smoot-Hawley Tariff Act). It became a prelude to the trade war and increased the scale of the large Depression — the most serious and drastic in the full past of capitalism.
Today the economical situation in the planet is much better, most economies are developing. Nevertheless, the consequences of Trump's decision may be serious. “We presume that economical growth in the US and their trading partners will weaken after the introduction of customs duties,” says Eiko Sievert of the rating agency Scope.
Serious shock on global trade
The president of the Institute of planet Economy in Kiel Moritz Schularick called the fresh American tariffs a major shock to global trade. — If these duties stay in force in this form, This will be a turning point for the global economy as we know it. We will then find ourselves in another planet trade system. This will truly hurt, and so will the Americans," said Schularick in an interview with Handelsblatt. With the fresh circular of Trump duties, the hazard that the US might fall into a recession became much more likely. Schularick Institute estimates that by Trump's decision inflation in the US will increase by a fewer percent.
Dirk Jandura, president of the German Association for Wholesale, abroad Trade and Services (BGA), fears that the increase in customs will have negative consequences for the German economy. “I say this rather openly: we will feel it. We will gotta translate the duties into an increase in prices, and this in many cases will mean a drop in sales,” he says. The Institute of Ifo expects German exports to fall by 15% as a consequence of customs duties.
Saul Loeb / AFPDonald Trump signing the fresh Customs Act, April 2, 2025.
Jandura fears that it may besides be a nail to the coffin for smaller companies that have already been severely weakened in fresh hard years. And if they do, it'll hit their employees, too. Jandura, however, believes that creating specified trade barriers will surely harm both parties. “This is an economical dead end that will origin crucial failure of prosperity on both sides of the Atlantic,” he says.
Double-edged sword
The United States is Germany's most crucial trading partner and the largest buyer of goods produced in the country. German exports to the world's largest economy amounted to over 161 billion EUR (616 billion PLN), reaching a evidence level last year. The United States is, for example, the largest car buyer in Germany, with 13.1% of all fresh vehicles exported last year going there.
President of the German Automotive manufacture Association (VDA) Hildegard Mueller sees fresh duties as a preview of fundamental cuts in commercial policy. — The United States turns its back on the principle-based global trade order — thus on the basis of global value creation and corresponding growth and prosperity in many regions of the world. This is not America first, this is America alone," she explained.
According to the head of VDA, the measures announced represent a immense burden for both companies and global automotive supply chains. — The 25 percent tariff implications that will be imposed on passenger cars, light commercial vehicles and any car parts since at least 3 April are inactive hard to estimate, he says. However, it is already clear to her that these changes will have a negative impact on global economical growth. And they will besides cost quite a few jobs.
Mueller calls on Brussels to take a firm position while signaling its readiness to negotiate. “The EU can and must act confidently and put all options on the table,” says president VDA. For example, it considers that the velocity and determination of free trade agreements should be importantly increased. — circumstantial results must be achieved covering as many regions as possible in the world. The EU must now advocate free and fair planet trade. The economy of Germany and Europe needs strong alliances and dynamic networks, says Mueller.
Trump's bargaining card
Wolfgang Grosse Entrup, Managing manager of the German Chemical manufacture Association (VCI), is of the same opinion. It calls on the EU to keep "cold blood" in consequence to the far-reaching fresh US duties. “The United States is and will stay Germany’s key trading partner. The escalation would only increase the damage. Our country cannot become a pawn in an escalating trade war, he says. It believes that in its consequence the EU must "be flexible and keep a close dialog with Washington". This must be a fair solution for both sides — Europe and the United States.
The question is, is Trump even interested? According to Solomon Fiedler, an economist at Berenberg Bank, customs are a bargaining chip for the American president. — For each country subject to customs duties, the US government has drawn up a list of alleged tariff and non-tariff trade barriers. This should be the starting point for negotiations in order to reduce duties slightly,” he says.
BRENDAN SMIALOWSKI / AFPDonald Trump holding a illustration with work rates in the Rose Garden in Washington, D.C., on 2 April 2025.
At the same time, however, Trump wants to rise fresh gross for the U.S. government in order to reduce the immense budget deficit. The U.S. government estimates customs gross at 600 billion dollars (about PLN 2.3 trillion), or about 2 percent of gross home product per year. Eiko Sievert thinks, however, that is far besides much. Trump besides wants to cut taxes significantly. In this context, it is unclear how the US budget situation would improve in the short term.
China's decisive response
The Trump-declared nonsubjective of softening regulation can stimulate economical growth in certain sectors in the short term. In the medium- and long-term, however, this increases risks in the financial system, says Sievert.
According to George Saravalos of Deutsche Bank, China can play a decisive role. It will depend on their consequence on the condition of the global economy in the coming months. The biggest negative surprise was a work of more than 50% on imports not only from China but besides Vietnam — many exporters treat the another country as an alternate location.
The question is, how will China react? — Will they effort to ‘export’ the shock to the remainder of the planet by devaluation of the yuan in order to reconstruct the competitiveness of their goods and redirect supplies of Chinese products to the remainder of the world? “ Saravelos is wondering.
If they did so, European companies would gotta deal not only with the decline in exports to the US, but besides with even greater competition from Chinese companies. Unless, of course, the EU responds again to fresh customs barriers against China. Welcome to the 1930s.
