Donald Trump promised during his campaign that he would tax all goods imported into the United States if he regained the White House. After his victory, businesses and economists around the world are scrambling to understand just how serious he is.
In the past, Trump has targeted tariffs on individual countries like China or on certain industries, for example steel.
But his election promise to impose 10 to 20 percent taxes on all foreign goods could affect prices around the world.
Last month, he appeared to point the finger at Europe.
“The European Union looks so beautiful, so beautiful, doesn't it? All the nice little European countries coming together… They don't take our cars. They don't take our agricultural products”, he declared.
“They sell millions and millions of cars in the United States. No, no, no, they're going to have to pay full price.”
BMW, Mercedes and Volkswagen stocks all fell between 5 and 7 percent after Trump's victory was confirmed. The United States is the largest export market for German car manufacturers.
During his campaign, Trump said tariffs were the answer to a host of problems, including containing China and preventing illegal immigration.
“The price is the most beautiful world in the dictionary,” he said. It's a weapon he clearly intends to use.
Although much of this rhetoric and actions are aimed at China, they do not stop there.
Some jurisdictions, such as the EU, are already drawing up lists of pre-emptive retaliatory measures against the US, after ministers failed to take seriously enough Trump's threats of tariffs, which he then imposed.
G7 finance ministers told me last week that they would try to remind Trump-led America of the need to have allies in the global economy, because “the idea is not to launch a trade war.”
However, if “very large and very strong power were used,” Europe would quickly consider its response.
In the past, the EU has imposed tariffs on iconic US products such as Harley Davidson motorcycles, bourbon whiskey and Levi's jeans, in response to US tariffs on steel and aluminum.
A senior eurozone central bank official told me that U.S. tariffs alone were “not inflationary in Europe but it depends on Europe's reaction.”
Last month, the IMF told me that a major trade war could affect the global economy by 7%, the size of the French and German economies combined.
The British government has some very big questions about exactly where the UK stands post-Brexit in a plausible, if not certain, transatlantic trade war.
The UK's direction so far has been to move closer to the EU, particularly on food and agricultural standards. This would make a close trade deal with the United States very difficult.
The Biden administration was not interested in such a deal. Trump's top trade negotiator, the still influential Bob Lighthizer, even said that the assumption that the UK would stay close to the EU to help its own businesses had stopped him from striking a deal.
“They are a much more important business partner for you than us,” he told me in an interview.
The UK could attempt to remain neutral, but would struggle to avoid the crossfire, particularly when it comes to trade in pharmaceuticals and automobiles.
The UK government's rhetoric suggests it might try to be a peacemaker in the global trade wars, but would anyone listen?
Britain could choose sides by trying to be exempt from Trump's broader tariffs.
Diplomats were encouraged by the president-elect's more pragmatic economic advisers, suggesting friendly allies could get a better deal.
Or would the world benefit more if the UK joined forces with the EU to prevent such tariffs from being implemented?
Outside of the United States, what is the example for the rest of the world?
If the world's largest economy resorts to mass protectionism, it will be difficult to persuade many smaller economies not to do the same.
This is all very much up for grabs. Trump's warnings can be taken literally. Nothing is certain, but this is how very serious trade wars can start.
