The ‘Trump Global Customs War’ is rapidly expanding the front line, leading to an all-out war.
The move comes as President Donald Trump not only doubled tariffs on China as he announced, but also reaffirmed that he would impose a 25% high tariff on allies with free trade agreements without additional moratoriums.
Following steel and aluminum, President Trump plans to impose mutual tariffs on virtually all countries around the world from the 2nd of next month, following tariffs by industry such as automobiles, semiconductors, and pharmaceuticals.
In response, China, Canada, and Mexico, as well as the European Union (EU), are planning to take retaliatory measures to protect their trade interests or are showing such signs.
Since President Trump has announced a counter-response to retaliatory measures, the biting trade war between the United States and major countries over tariffs is expected to heat up.
If the U.S. announces the imposition of tariffs on Korea’s major export items such as automobiles and semiconductors, and if a global tariff war breaks out due to the expansion to other countries, there are concerns that Korea, a trade-oriented economic system, may have difficulty not only exporting to the U.S. but also exporting to other countries. President Trump announced on the 3rd that he will raise additional tariffs on China to 20 percent from the 4th and impose 25 percent tariffs on Mexico and Canada.
He signed an executive order to raise China’s tariffs from 10% to 20% on the same day, confirming additional measures against China.
“China has not done enough to reduce the illegal drug crisis,” he said in an executive order, citing the imposition of additional Chinese tariffs.
At the TSMC’s announcement of investment in the U.S., President Trump said, “There is no room for (negotiation) between Canada and Mexico,” adding, “All preparations have been completed and will take effect tomorrow.”
As a result, full tariffs will be imposed on products from Canada, Mexico and China, the three largest trading partners of the United States.
These three countries account for more than 45% ($3 trillion) of all U.S. imported products (value) as of 2022.
In addition, China is expected to deal a significant blow to Chinese companies’ exports to the U.S. and U.S. companies’ production in China, as tariffs on major products have already been imposed during Trump’s first phase.
Furthermore, Canada and Mexico, which have a trade agreement (USMCA) with the United States, are also expected to have a significant impact on the three economies of the United States, Canada and Mexico, as tariffs have soared to 25% (10% for Canadian energy) from virtually zero tariffs since the 1980s.
In particular, U.S. companies often have integrated supply chains, such as production facilities in Canada and Mexico.
Immediately, the U.S. stock market plunged, with the S&P 500 index falling 1.76% from the previous session when President Trump said he would not hold off additional tariffs on Mexico and Canada, which he had suspended for a month after trying to impose on the 4th of last month.
In addition, warnings continue in the U.S. that prices could rise as the amount is passed on to consumers if President Trump takes measures to impose tariffs.
However, President Trump and Trump’s officials are responding with confidence to the tariff measures.
“Tariffs make it easy, fast, efficient, and fair,” Trump said on the same day. “It will be very expensive for people who want to use the U.S. They can’t come to the U.S. and steal money or jobs.”
He also praised TSMC’s investment plan in the U.S., reaffirming its existing position that if you want to avoid tariffs, you can invest in the U.S. and produce it.
“This is a totalitarian approach,” Treasury Secretary Scott Bessent said in a media interview the previous day. “If there are tariffs, regulatory cuts, and falling energy prices, (price) will quickly fall to the Federal Reserve (Fed) target of 2 percent.”
President Trump has decided to impose 25% tariffs on steel and aluminum from the 12th and has ordered the government to determine the impact on national security with the aim of imposing tariffs on copper and wood.
Furthermore, tariffs on automobiles, semiconductors, and pharmaceuticals are expected to be announced this month, and mutual tariffs will be carried out as scheduled on the 2nd of next month.
In the case of mutual tariffs, some say that they are virtually similar to the universal tariffs that President Trump pledged during the presidential election, given that the concept is to use tariff cards in consideration of non-tariff barriers in virtually all countries around the world. In response, Mexico will prepare a scenario-specific response plan and respond if the U.S. actually implements tariff measures.
President Claudia Sheinbaum said, “We have prepared a plan to prepare for any case from Plan A to D.”
Canada also plans to counter all $20 billion worth of U.S. products, including orange juice, with retaliatory tariffs if the U.S. tariffs are imposed.
Canada is also preparing follow-up measures for automobiles, trucks, steel, and aluminum products, the Wall Street Journal (WSJ) reported.
China, the largest importer of U.S. agricultural products, is considering retaliatory measures against agricultural products and food products in response to the U.S. imposition of 20% tariffs, China’s state-run English newspaper Global Times reported.
If the global tariff war expands, it is expected to adversely affect global growth.
In a January report, the World Bank predicted that this year’s economic growth rate would fall 0.3 percentage points from the forecast (2.7%) if the Trump administration imposes a 10% universal tariff and other countries take corresponding measures.
SAM KIM
US ASIA JOURNAL
