A New Term, A New Trade Agenda: President Trump’s Second Term
Donald Trump’s presidency was marked by a significant shift in US trade policy, characterized by the imposition of tariffs on goods from various regions, including North and South America, Europe, Asia, and Africa. Trump’s “America First” approach aimed to protect US industries and reduce the country’s trade deficit. However, the tariffs had far-reaching consequences, sparking trade wars, diverting global supply chains, and impacting economies worldwide.
The effects of Trump’s tariffs were felt across the globe, with each region experiencing unique challenges and opportunities. In North and South America, the tariffs affected trade relationships with the US, particularly in the automotive and agricultural sectors. In Europe, the tariffs led to retaliatory measures and concerns about the future of the transatlantic trade relationship. In Asia, the tariffs sparked a trade war with China, while in Africa, they undermined economic development and perpetuated dependence on other regions. This report examines the impact of Trump’s tariffs on global trade, exploring the consequences for each region and the future of international trade.
The Trump administration imposed tariffs on Canadian steel and aluminum, which led to retaliatory tariffs from Canada. However, in May 2019, the US lifted these tariffs. The tariffs on steel and aluminum imports from Canada and Mexico were estimated to be around $9 billion and $1.8 billion, respectively, based on 2018 levels.¹ Additionally, the tariffs on steel, aluminum, and derivative goods currently account for $2.7 billion of the $79 billion in tariffs.
The tariffs imposed by the Trump administration had a significant impact on US businesses and consumers. The tariffs were estimated to reduce long-run GDP by 0.2 percent, the capital stock by 0.1 percent, and employment by 142,000 full-time equivalent jobs. Furthermore, the tariffs were estimated to increase tax collections by $200 to $300 annually per US household, on average.
Now that President Trump has been sworn in, his tariff policies are likely to have a significant impact. According to estimates, if Trump imposes tariffs of 25 percent on all imports from Canada and Mexico and an additional 10 percent tariff on all imports from China, it could generate $1.2 trillion in tax revenue from 2025 through 2034. However, this could also reduce GDP by 0.4 percent and employment by 344,900 jobs.
South America’s trade dynamics have been influenced by the Trump administration’s tariffs, particularly those imposed on steel and aluminum. Although these tariffs were lifted in May 2019, they had a significant impact on the region. Brazil and Argentina, for instance, benefited from the trade diversion, increasing their soybean exports to China and replacing US exports.¹
The US is a significant market for South American countries, with the region exporting over $72 billion worth of agricultural products to the US between 2021 and 2023. Mexico dominates these exports, accounting for $42 billion, while other countries like Chile, Colombia, and Peru also have significant trade relationships with the US.² However, the dependence on the US market varies widely among South American countries, with Mexico being the most vulnerable.
As President Trump begins his second term, his trade policies are likely to have a significant impact on South America. The possibility of renewed trade tensions and tariffs could lead to trade diversion, creating opportunities for countries like Brazil and Argentina to increase their exports to the US or other markets. However, this could also lead to higher food prices and reduced US exports, ultimately affecting US producers and consumers.
The Trump administration’s tariffs on European goods led to retaliatory measures from the European Union. The EU imposed tariffs on $3.2 billion worth of US goods, targeting products such as bourbon, motorcycles, and orange juice.¹ According to the European Commission, the tariffs affected approximately 2.8% of EU exports to the US.² The EU also won a WTO dispute against the US, authorizing tariffs on $7.5 billion worth of US goods.
The tariffs had a significant impact on European industries, particularly the automotive sector. The US imposed a 10% tariff on European aluminum and a 25% tariff on steel, affecting major European exporters like Germany and the Netherlands.³ According to the European Automobile Manufacturers Association (ACEA), the tariffs could lead to a decline in EU automotive exports to the US, potentially costing the industry up to €6.4 billion annually.
The Trump administration’s tariffs on Chinese goods led to a prolonged trade war between the two nations. China retaliated with tariffs on US goods, affecting US exports and leading to a significant decline in US-China trade.¹ In 2019, US exports to China declined by 11.3%, while Chinese exports to the US declined by 10.7%.² The trade war had a ripple effect on other Asian countries, with some benefiting from trade diversion and others facing declines in exports.
The tariffs had a significant impact on Asian industries, particularly in the technology and manufacturing sectors. Countries like Vietnam, Taiwan, and South Korea benefited from trade diversion, increasing their exports to the US and other markets.³ However, other countries like Japan and Singapore faced declines in exports due to their heavy reliance on trade with China and the US.
As President Trump begins his second term, his trade policies are likely to continue shaping the Asian trade landscape. The possibility of renewed trade tensions and tariffs could lead to further trade diversion, creating opportunities for countries like Vietnam and Taiwan to increase their exports. However, this could also lead to higher prices and reduced economic growth, ultimately affecting consumers and businesses across the region.
Donald Trump’s tariffs had a significant impact on Africa, with many countries suffering from the planned punitive tariffs. As the African proverb goes, “When elephants fight, it is the grass that suffers”.¹ This was particularly evident in South Africa, where Trump’s focus on protecting the US economy could have dire ramifications, including increased tariffs on imports and impacting South African exports.
Trump’s “America First” stance and tariffs meant a severe blow to participatory economic development in Africa. The African Growth and Opportunity Act (AGOA), Cotonou Agreement, and Economic Partnership Agreements (EPAs) were all affected, undermining years of talk on partnership for economic development. Additionally, Trump’s derogatory comments on Africa in January 2018 further highlighted his disregard for the continent’s economic well-being.
The impact of Trump’s tariffs on African trade was substantial, with many countries facing reduced exports and economic growth. The tariffs also led to trade diversion, with some African countries increasing their exports to other markets. However, the overall effect was negative, with Trump’s policies undermining Africa’s economic development and perpetuating the continent’s dependence on other regions.
Dr Chukwuemeka Ifegwu Eke writes from the University of Abuja Nigeria.
