Trade Wars Reloaded: The Global Fallout of Trump’s Tariffs
- Richard Phipps
- Mar 29
- 6 min read
Save the nation to destroy the world?
Donald J. Trump began his second term in the White House on January 20, 2025. Since then, tariffs have escalated, playing a key part in his presidential manifesto, even more so than in his first term in office. While Trump's first administration imposed tariffs on approximately $380 billion of imports, his second administration is expected to exceed $1.4 trillion by April 2025 (1). Firstly, let us consider the tariffs that are in effect.
These include:
The most significant proposed tariffs include:
Worldwide worry?
In relation to the information above, it is important to come to some understanding of who will be impacted most as a result. Overall, due to the targeted taxes listed, the likelihood is that China, as well as neighbours Mexico and Canada, receive the initial brunt of these implications. Trump believes this is an appropriate response to promote sustainable US trade alongside reducing illegal migration and smuggling. Additionally, with Canada being the number one exporter and Mexico being the third greatest exporter of U.S steel, accounting for 23% and 12% of its 2024 imports, respectively, these two countries are potentially expecting the highest burden (7). Moreover, tariffs introduced affected 40% of all U.S imported goods coming from these big 3 players (8), fortifying the idea that these three will be affected most.
In response, Canada and Mexico have imposed or suggested they will impose countermeasures to mitigate the probable impacts, including their own tariffs on US exports. With Mexico and the US being each other's top providers of imported goods (9), this will lead to negative implications, not only for the nations’ overall level of growth but also for individual consumers. From an economist's point of view, the rationale behind Trump’s relationship with Mexico is questionable as prices are expected to hike, with the Mexican President Claudia Sheinbaum stating “nobody wins” (10). With all countries involved introducing similar measures of their own, this leads to a ripple effect where everyone is paying more to export goods due to the higher prices, which in the end crucially hurts the consumer.
This echoes European Commission President Ursula von der Leyen, who said she "deeply regrets this measure" in reflection of the EU introducing their own response tariffs on over £22bn of US goods and that Tariffs are "bad for business and worse for consumers" (11).
Too slow from Starmer?
With many of Trump’s tariffs postponed or proposed to be in effect from 2 April 2025 onwards, the impact on the UK especially is currently ‘up in the air’. However, we can see how the steel and aluminium tariffs have affected the UK. This tariff alone has affected UK products worth ‘hundreds of millions of pounds’ (12). The UK’s two biggest steel companies, Tata Steel and British Steel, are expecting a ’flood’ of underpriced steel to enter the UK and told MPs they were looking for alternative suppliers. Additionally, Rajesh Nair, chief executive of Tata Steel UK, said: “Customers are already talking to us and wanting to cancel orders” (13). With the tariffs having been in effect for just over a month, it is clear that Trump has already had and will continue to play a critical part in UK business operations. The EU is already acting to block diverted steel from their market (14); however, Kier Starmer does not appear to have put any precautionary measures in place, hence Allan Bell’s (CEO at British Steel) response stating he would like to see the UK government’s ‘pace increase’ as he believes the UK are already at a disadvantage due to higher energy prices (15) which make UK steel prices less competitive already.
With future tariffs likely to be introduced, the UK will need to adapt its trade patterns. Alternatively, we could see the introduction of a US-UK trade agreement that aims to ‘insulate the UK from the direct impact of global trade tensions’ (16). This will nullify the potential implications of President Trump’s trade taxes, reducing the possibility of price rises for items such as cars, medical devices and even canned beverages in Britain. Although, indirect impacts are probable, with the UK still acting as a protagonist for global trade. Plus, the chance of a trade deal to lower all existing barriers is unlikely. Starmer is already under pressure from UK industries such as agriculture, so he is not going to put US farm imports on the table (17). The more probable outcome is an ‘economic deal’ focused predominantly on technology; thus, the significance of this relationship is much lower than before, with the main UK aim of dodging the tariffs, not necessarily ‘carving new markets’. Moreover, with the UK and US both refusing to sign the “inclusive and sustainable” AI declaration at the recent Paris summit, this deal seems increasingly likely (18).
However, if a deal does not happen and the US economy grows because of these tariffs, the US president is likely to introduce more of these practices on a wider range of products/materials. Analysis by the National Institute of Economic and Social Research suggested a 10 per cent tariff on all US imports could see the UK sterling lose 10-15 per cent of its value against the dollar. This could see inflation rise significantly (19). For smaller UK businesses such as Silent Pool (a gin distillery in Albury, England, who have exported large amounts of its product to California, USA, since Brexit in 2020) (20), they could be impacted massively. A gap that they initially found due to their international expansion could be flawed as prices of their gin will rise, reducing their competitiveness across the pond and increasing the difficulties of their overall operations. This is just one of the many small UK businesses that will be dramatically affected, with industries such as pharmaceuticals, food, and cars, which all rely on large exports to the US.
Potential Positives from Trump’s Taxation Policies
The most likely positive from ‘Trump's Trade Threats’ - the Economist, are the success that the Asia-Pacific region could receive. With the increase in export prices into the US, Asian countries, especially China, are seeking alternative buyers. These include the surrounding nations who have a lot to gain, e.g., Vietnam, Malaysia, and Kazakhstan. Vietnam seems the most likely relocation for Chinese business given their positive trade relations with the U.S - the largest export market for Vietnam (21). Therefore, China’s neighboring economies could rise, reinforcing the complexity between policy decisions and market environments. Additionally, China’s exports only account for 3% of its national income (22), which is insignificant and could be easily altered by switching to another market.
Surprisingly, despite the negative implications discussed, the UK could also benefit from economic advantages. The likelihood is that, because of leaving the EU, the UK will look to tighten relationships with the US, with the chance of a trade agreement looming. Subject to the terms included, this could see a rise in accessibility to cheaper goods and the potential for inflation to fall (23). Consequently, we may see the interconnectivity of the Western World rise more than expected. Furthermore, Trump’s tariffs could also incentivize domestic industries to thrive. This would result in the UK being less reliant on other markets by strengthening its own sectors.
However, global trade tensions are still continuously intensifying as these are all possibilities, and fate is fate.
At the end of the day, what will be will be!
References
Written by Richard Phipps | University of Bath
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