The latest decision by US President Donald Trump left investors in a tour – for a good reason.
With the blow of a pen, the prices he imposed in Canada, Mexico and China fell by 70 years, erasing decades of globalization.
The prices, he says, is a beautiful word, signaling jobs and wealth for America.
However, history tells us that those who take the opening blows in a trade war also suffer strong victims. Despite the rhetoric of the president, American consumers are on the front line.
These additional taxes mean that Americans have faced the highest level of prices on goods imported into their country since the 1930s.
Mexico vegetables, Canada wheat, toys and t-shirts from China are all in the shooting line. The retailers of these items can have very narrow beneficiary margins and will quickly increase prices to cover prices.
Consumers will notice the price increase.
The grocery store can be one of Trump’s favorite words, but his own electorate may not appreciate the increase in bills they could face. Assuming that no other tariffs, economists suggest that American inflation, already higher than expected, could increase more to the second half of this year.
A price to pay “to make America again large”? Look no further than the laundry room for a edifying story.
During his first mandate in 2018, Trump imposed prices of up to 50% on washing machines imported after the American producer Whirlpool complained of the cheap South Korean competition.
These rivals – Samsung and LG – then set up in America, creating nearly 2,000 jobs.
But at what price? An imported washing machine cost an American buyer almost a third more at the beginning of 2023, just before the aboli of the prices, only five years ago.
Add the costs of prices and a study claims that each of these jobs costs Americans the equivalent of more than $ 800,000 (£ 627,000).
These prices of course meant the revenues of American governments and this source has increased considerably in recent years, following the raft of prices that Trump also imposed during his first mandate on China – most of which were kept under President Joe Biden.
However, the amount reported is equivalent to a tax increase in American households up to $ 300. In the end, they are the ones who make the foot of the invoice – and will continue to do so.
Then consider the impact on American manufacturers who have companies resuming Canada, Mexico and perhaps even China. Overall, economists think that we could consider a blow for American growth up to 1% – not enough to cause a recession, but nevertheless unwanted.
In terms of numbers, the Canadian economy could be greater, according to economists. It sells more than $ 400 billion in America in America each year, representing one fifth of its income.
But it has the capacity to reduce interest rates and healthy public finances, offering political decision -makers a range to increase the blow for Canadians.
Damage to Mexico’s national income could be less serious, but its central bank has less capacity to reduce interest rates, which makes pain deviation more difficult.
All this will be impatiently monitored by the European Union, probably online for these Trump prices. Germany, already in a fragile state, represents approximately a third of the goods sold by the EU in the United States.
China, despite being the target of Trump’s repeated trade blows, could actually be less vulnerable. Its exports to the United States represent less than 3% of national income – easily composed elsewhere.
Ironically, part of this resilience is due to the prices imposed by President Trump the last time. China has simply sought new markets.
Countries like the United Kingdom could also benefit from an extension of such a commercial diversion, more access to cheaper goods – something that could reduce our own inflation.
A key point on trade wars is that there are winners as well as losers – especially for countries outside the president of President Trump. Vietnam and Malaysia, for example, saw their exports develop quickly during President Trump’s last term when they rushed to replace China by selling America.
If the United Kingdom continues to escape the anger of President Trump, we could in fact benefit from closer trade links with his country and, in fact, greater foreign investments, if we seemed to be a more certain environment than some of our competitors. But of course, our fate is not clear.
In the current state of things, the prospects for global growth in 2025 have finished, but a recession seems very unlikely. However, in the world of Trump, we learned very quickly to expect the unexpected – so it is still what’s going on from here.
And this uncertainty itself affects companies in the United States and around the world, praying to key decisions about the place where investing and creating jobs.
Armament uncertainty also has a price – even on the floor at home.
