Postscript: Trump's trade war threatens the world with recession
A full-scale trade war in the world will lead to a global recession, experts interviewed by Izvestia believe. Since April 9, increased US duties against a number of countries will come into effect. And for China, they were raised to 104% altogether, as the republic introduced retaliatory measures. At the same time, more than 70 countries have already approached the White House with a proposal to review tariffs — the market reacted positively to this and stopped declining. But it won't be possible to recoup the fall of the last week quickly. What will happen to the global economy is in the Izvestia article.
Trump's tariffs: against whom he imposed retaliatory measures
On April 9, the second part of Donald Trump's previously announced trade duties comes into force. From this day on, increased tariffs will take effect for a number of countries: for example, for Cambodia — 49%, for Vietnam — 46%, for China — 34%, for Japan — 24%, and for EU states — 20%.
America's main task was to lure production facilities to its territory, because the shortage of domestic factories, as Trump said, turned the American market into a consumer of exclusively imported goods. If companies decide to move their business to the States, this will lead to the cancellation of all duties.
China has already been the first to announce retaliatory measures. The country has introduced mirror duties of 34%, which will take effect on April 10. In addition, Beijing has appealed to the World Trade Organization (WTO). "The Chinese made the wrong move, they panicked, and that's the only thing they can't afford!" Trump responded to China's retaliatory measures on social media. And US Treasury Secretary Scott Bessent considered that China had decided to isolate itself by accepting retaliatory duties against the United States.
In turn, on the evening of April 8, America implemented the previously announced threat — increased import duties on Chinese goods from 34% to 104%, Fox correspondent Lawrence reported, citing a White House spokesman. The Chinese Ministry of Commerce called the US actions blackmail. According to representatives of the department, they intend to "fight to the end if America insists on its own."
The British government picked up the baton and spoke out about possible retaliatory tariffs for the United States. London has compiled a list of more than 8,000 goods that may fall under its measures. It will include, in particular, certain types of animals, food, fertilizers, chemicals, building materials and cars. By May 1, Britain will give residents the opportunity to decide the fate of those goods that will be blacklisted.
The European Union is also preparing a package of targeted countermeasures worth up to $28 billion. It will include basic goods: meat, wine, clothing, cereals, as well as chewing gum, vacuum cleaners and toilet paper. In particular, the European Commission is proposing to impose a 50% tariff on bourbon, an initiative that Trump has already responded to. He threatened a 200% levy on alcoholic beverages from the European Union. This, in turn, caused discontent in Italy and France, which traditionally import a lot of wine.
However, not all states have decided to enter into disputes. According to US Treasury Secretary Scott Bessent, representatives of more than 70 countries have already contacted Trump after the introduction of large-scale import duties.
The reaction of global markets to the US duties
The markets reacted positively to the news that some countries may reach an agreement with the United States, as a result of which duties will be abolished at least partially. On April 8, China's Shanghai Composite gained 1.5%, Japan's Nikkei gained 6%, and the US NASDAQ gained less than 1%. The German DAX and the British FTSE 100 showed positive results of more than 2%.
However, the markets are still far from recovering from the previous week's falls. Starting from April 3, after the duties were announced, global platforms lost 10-15%.
In addition to stock indexes, Trump's tariffs are already having an active impact on oil. During the week, Brent quotes lost about 10%, falling from $74 per barrel to $64. In March of this year, the price of Russian Urals was slightly below $59 per barrel — as a rule, it decreases proportionally with Brent. As Izvestia wrote earlier, the cost of the latter may go below $ 60 per barrel.
How companies are preparing for the Trump tariffs to take effect
The automotive market has also reacted negatively to Trump's new trade duties. The Dutch concern Stellantis, which manufactures Alfa Romeo, Fiat, Jeep, Maserati, Peugeot, Citroen and Opel, was one of the first to announce a temporary halt in production at key plants in Canada and Mexico. British Jaguar Land Rover has halted deliveries of premium cars to the United States for one month.
The German company Audi also completely suspended the export of cars to America — it informed dealers about this decision in letters. Currently, there are about 37 thousand cars in Audi warehouses in the United States that are not subject to the new tariffs — they are planned to be sold, according to Der Spiegel. Cars imported into the country after April 2 will not be handed over to dealers.
But the Japanese company Nissan Motor decided to move part of the production of the Rogue model to the United States. Following the news of the trade tariffs, Volvo also promised to increase production in South Carolina.
The reaction is also noticeable in the smartphone market. On April 7, Apple sent five planes filled with iPhones and other equipment from India to the United States in order to replenish store stocks before the start of Trump's duties, Indian media reported. This unplanned delivery should help the company maintain the old prices for at least a couple of months.
The impact of Trump's tariffs on the global economy
With its duties, the United States is "breaking" economic production chains that existed for decades, says Pavel Seleznev, dean of the Faculty of International Economic Relations at the Financial University under the Government of the Russian Federation. As Izvestia reported earlier, the volume of imports to the United States from countries for which Donald Trump is imposing duties may decrease by at least 10-15%.
First of all, the fees imposed will hit the United States itself. They will lead to an increase in the average import tariff by 18 percentage points, which is highly likely to cause a spike in inflation and a subsequent recession in the United States, Freedom Finance Global analyst Georgy Timoshin expects. A recession implies that the economy is slowing down significantly and consistently, and this lasts for at least several months, and may stretch for years.
Due to the introduction of duties, the trade turnover between the countries will fall, which will give a new impetus to the recession in most countries, agrees Tatiana Skryl, Associate Professor of the Department of Economic Theory at Plekhanov Russian University of Economics. If Trump does not change his policy, the risks of a slowdown in the global economy will rise to 70%, said Georgy Ostapkovich, director of the HSE Center for Economic Studies.
China may be next to the United States in terms of losses from trade wars. The growth of its economy can slow down to 2% after 4-5% in recent years, even during lockdowns, recalled Kirill Seleznev, an expert on the Garda Capital stock market.
— However, China has more opportunities to adapt to the changes. He is able to compensate for some of the losses by manipulating the yuan exchange rate, mitigating the impact of trade restrictions. The cheaper the national currency, the more profitable the export," says Dmitry Kuznetsov, a researcher at the International Laboratory for Foreign Trade Research at the IPEI Presidential Academy.
The customs war may contribute to the creation of an economic union between the EU and China. They will probably decide to switch to trading with each other, suggests Georgy Ostapkovich from the Higher School of Economics. Countries will change priorities, but it will not be so easy and fast, he added. This could lead to the United States eventually abandoning, at least partially, the imposition of trade restrictions.
Переведено сервисом «Яндекс Переводчик»
