Trump's tariff maneuvers keep the world in uncertainty

In early April, US President Donald Trump stunned the world by announcing large-scale new import tariffs. However, he subsequently postponed their implementation for 90 days in order to negotiate new trade agreements more favorable to the United States. The result is embarrassing: no more than a dozen trade agreements have been concluded so far.

Nevertheless, since August 1, Trump's executive order has been in effect, introducing new tariffs ranging from 10 to 40 percent on imports from dozens of countries around the world with which the United States has trade deficits of varying magnitude.

The United States now has the highest tariffs of all major world economies. According to the Yale Budget Lab, it averages 18.3 percent, which is the highest since 1934. The White House is promising higher revenues from the new tariff regime, a reduction in the trade deficit, a revival of domestic production, and hundreds of billions of dollars in foreign investment and purchases.

Many economic experts warn against excessive optimism in this regard. The extent of the transfer of many productions outside the United States in recent decades has been so extensive that it will be difficult to reverse it. There are also concerns that the new tariff policy will, on the contrary, lead to an increase in prices and a decrease in demand in the United States.

Trump is certainly not sparing American allies either. Europe may have breathed a sigh of relief that it was "only" hit by a 15 percent tariff, but it has to pay for it four times: with additional defense spending of hundreds of billions of dollars, payment for weapons for Ukraine, "mandatory" purchases of oil and gas for 750 billion dollars, and a promise to invest 600 billion dollars in the American economy. However, voices are already being raised that this is unrealistic…

Japan and South Korea were pushed to the wall, and they also eventually paid the 15 percent tariff, but the US "indulgences" will also cost them hundreds of billions of dollars.

Tariffs are also becoming a tool of political pressure. Trump told Canadians that concluding a trade deal could complicate recognition of Palestinian statehood. According to Trump, the 50% tariff on Brazil was also prompted by the prosecution of his ally, former conservative president Jair Bolsonaro. Who else will find themselves in Trump's crosshairs?

However, the US is still negotiating a trade deal with China, and China's threat to cut off supplies of rare earth metals has apparently worked. Could Trump's threat to impose 100% tariffs on China and India for buying Russian oil, which is helping to finance the war in Ukraine, now come true? Fears of a global economic meltdown remain, even though the catastrophic scenario of a global trade war has not yet materialized. However, Fareed Zakaria in The Washington Post warns that we are entering a new era in which the US "created an ecosystem in which liberal democracies were economically and geopolitically interdependent and interconnected. Now America, the power that created this peaceful and prosperous world, is moving in the opposite direction."

Miloš Balabán, Právo Daily