After a much publicised election campaign, Donald Trump will take over as the new US president on January 20th and countries around the world wait to see what happens with import tariffs.
Trump has frequently stated he will impose tariff hikes of up to 60% from China and 10-20% from the rest of the world, even saying “Tariff is the most beautiful word in the dictionary.” If he carries through with these threats, then global trade could look very differently.
China
A 60% tariff increase would substantially increase the cost of Chinese products in the US. Transpacific trade is the world’s largest market and if business was to drop off significantly due to higher costs, then this could have a far reaching impact on other markets. Theoretically, tariff increases could come by the end of the Chinese New Year in February.
Europe
Trump hasn’t held back on Europe, saying about the EU “They don’t take our cars. They don’t take our farm products,” and adding about European car sales in America “they are going to have to pay a big price.” Some media reports suggest the EU are already working on contingencies for retaliatory actions against the US.
UK
The UK has a so called ‘special relationship’ with the US, which may be tested if Trump’s threat to add 10-20% to rest of the world tariffs is imposed on British products. However, if the UK does negotiate its own beneficial deal and the rest of Europe receives tariff hikes, then the UK’s relationship with the EU may become difficult.
Of course, some of the threats may have been warning shots and the incoming president may not be as harsh with tariffs as he has himself suggested, but he has certainly got global trade leaders paying attention!