During a speech at a rally in the state of Ohio, named by his staff “The Day of Liberation”, Donald Trump hit the United States trading partners hard and announced a fresh wave of customs duties on imported goods.
“For decades our country has been utilized in global trade. This ends today. We will no longer passively watch another countries exploit our open markets" ex-president, who continues to run actively before the next election, thundered.
Trump announced the introduction of a uniform 10% tariff for all imported goods. But it's only the beginning. For the selected countries there are importantly higher rates – for China the tariff is expected to be 44%, for Vietnam 56%, for Taiwan 42% and for the European Union 30%.
"China does not play fair. Europe? They're even worse. And yet, they come to us, they negociate and – virtually – they kiss us in d..." said Trump, raising laughter in the room.
And he continued:
“They come here, they want deals, they want mildness, but I tell them: it is besides late. You had your chance. Now we play my rules.”
The erstwhile President, who initiated respective trade battles during his first term, mainly with China, claims that the fresh duties are a consequence to chronic inequalities in the exchange of goods.
"Our trade deficit is like an open wound. These duties are dressing, possibly even a scalpel. Yes, we will cut," Trump said.
Responses to Trump's declarations came to an instant. Ursula von der Leyen, president of the European Commission, stated that "protectionist actions can have serious and long-term effects on the global economy". The Ministry of Commerce of China described Trump's statements as “Arrogant and destructive” and announced "symmetrical retaliation measures". On the another hand, the Canadian Prime Minister announced that ‘Canada will not be intimidated and respond proportionally’. Japan was equally critical, who called on the U.S. Ambassador to talk, setting tariffs as "extremely regrettable".
The reactions on Wall Street were fast and clearly negative. The S&P 500 index dropped by 1.6%, Dow Jones by 0.8%, and Nasdaq by 2.1%. In Asia, the stock exchanges reacted even more – nipponese Nikkei 225 recorded a decrease of 7.8%, which was the 3rd largest one-day drop in its history. German DAX and French CAC 40 besides flew down by 3.1% and 3.3%, respectively.
Economists inform that a fresh tariff wave can do more harm than good.
"The emergence in retail prices is an inevitable consequence of specified actions. The introduction of tariffs on specified a scale can hit not only importers but besides consumers, as well as US supply chain companies from Asia and Europe," said Dr Ellen Wright of Harvard Business School.
Some commentators point out that despite Trump's hard rhetoric, any countries can benefit from the distortion of global trade relations. Brazil, Egypt or Morocco can find fresh customers for their goods in place of the US, especially if China and the EU start looking for alternatives.
Trump doesn't seem to care.
"I don't care who wins. I care about America yet stopping losing. And let them say I'm difficult. I would alternatively be hard and effective than good and weak," he said in the end of his speech.
In conclusion, it is worth recalling the numbers that show the voltage scale:
- announced basic tariff: 10% for all imports,
- Chinese product tariff: 44% (10% + 34%).
- EU tariff: 30% (10% + 20%),
- Vietnam product tariff: 56% (10% + 46%).
- Taiwanese product tariff: 42% (10% + 32%).
- Stock indices decline after customs announcement: Nikkei 225 by 7.8%, S&P 500 by 1.6%, Nasdaq by 2.1%, DAX by 3.1%, CAC 40 by 3.3%.
What will be the further effects of this strategy in the coming months. 1 thing is certain – Trump returns to the center of the planet scene again, and as always – with a bang.
