Tag: Tariffs

Trump’s Trade Tariffs: Evidence of American Aggression and Unreliability

Posted on by Allawi Ssemanda

In what many described as not surprising but still shocking, on Monday 10th February, the President of the United States of America (U.S), Donald J. Trump announced that Washington was slapping 25% tariffs on all aluminium and steel imports accessing the U.S market.

Speaking from White House where he made the announcement, Trump reasoned these tariffs are meant to reshape international trade. Without facts, America’s whining “tariff man” claimed global trade is unfair to the U.S and American workers. He proclaimed that his unorthodox use of tariffs was “the greatest thing ever invented” as he boasted calling it “the beginning of making America rich again.”

Despite stressing that these tariffs will apply to “all countries with no exemptions, no exceptions,” scholars and analysts contend that Trump’s 25% tariffs will largely affect Washington’s immediate neighbours like Mexico and Canada. The American Iron and Steel Institute lists Canada, Brazil, Mexico and South Korea as America’s major sources of steel and aluminium products.

Canada and Mexico, both America’s closest neighbours and trading allies are already under Trump’s pressure with the leaders of the two countries having agreed with Trump to pause his 25% tariffs levy on Canada and Mexico for 30 days after last minutes negotiations with “tariff man.”

For China, her products entering into the U.S are already facing a 10% levy announced by Trump on February 10th. Beijing has since then reciprocated with a similar percentage levy onto U.S exports into China. Trump is already threatening with a round of reciprocal tariffs. Such reciprocal tariffs would follow 25% levys Trump announced on aluminum and steel products and his additional 10% levy on Chinese goods. Despite criticism by several analysts, Trump insists “the long-term it’s going to make our country a fortune.”

While Trump is describing his use of tariffs against other countries as “the greatest thing ever invented,” and calling it “the beginning of making America rich again,” if critically analysed, his tariffs are not only likely to create negative impacts to targeted countries but will equally hurt the American Economy.

This week’s Statisticts from The U.S Bureau of Labor Statisticts shows that wholesale prices in the U.S have already jumped by 3.5% while consumer prices rose by 3%! Projections for U.S economy bears no good news. Ernst and Young’s chief economist, Greg Daco contends that in 2025 alone, America’s Growth Domestic Product (GDP) is likely to contract by 1.5% and 2.1% in 2026 with inflation rising by about 0.7%.  A deep analysis of this gambling method means that in a typical Donald Trump style – projecting toughness and being wise, “tariff-man’s” use of  tariffs as many analysts argue is an own goal and recipe for slowing America’s economy and will increase inflation which will hurt the very people Trump claims wants to save by forcing companies to work in the U.S and create jobs as a way of dodging his tariffs.

While Trump claims tariffs are meant to safeguard the U.S from the so-called  drugs, illegal immigrants as he noted for the case of Mexico and Canada, and ending what he called unfair trade with China, analysing Trump’s speeches and remarks on these tariffs makes one thing clear. President Trump is an Isolationist who thinks the U.S can be a perfect closed economy. Of course, this is far from reality.  For example, while announcing 25% now paused tariffs on Canada and Mexico, Trump was categorical telling Americans “we don’t need the products they have. We have all the oil you need. We have all the trees you need, meaning the lumber.”

It is not surprising that the Wall Street Journal’s (WSJ) 31st January 2025 editorial entitled “The Dumbest Trade War in History” argued that Trump’s tariffs are “for no good reason” and that all reasons advanced by Trump “make no sense.”

From multinationalism perspective, weaponizing trade at a time when the world is faced with economic recovery challenges partly caused by the Covid19 pandemic, and aware that free trade and uninterrupted global chain supply is key for the world to realise United Nations’ agenda 2030, one can conclude that under President Trump, the U.S is now openly selfish and cannot be relied on as a responsible member of global community.

A sign that reads ‘Buy Canadian Instead’ is displayed on top of bottles at a B.C. Liquor Store, in Vancouver, on Feb. 2.Chris Helgren/Reuters

Whereas Trump maybe boasting with his dumbest trade war hopping to reshape global trade on his terms, the scars will not be felt by targeted countries alone but also his voters who as of now Trump seems not to care much about. They already voted for him and he will not be seeking another term. Again, with his 23rd Jan. 2016 “I could stand in the middle of Fifth Avenue and shoot somebody, and I wouldn’t lose any voters, OK?”, Trump knows his suppoters are fanatics who can simply sell lies and blame another country say China and accuse it for their suffering should his trade war effects be devastating to American final consumers as many analysts predict!

While for geopolitical reasons some war hawkers in Washington may argue that Trump’s tariffs will slow China’s economic growth, at the end, the U.S will lose more than China.  It is important to note while his rhetoric is more against China, Trump is also targeting America’s closest neigbours and trading partners like Canada and Mexico. The message from this is clear. As Bernard Lewis taught us, “it’s risky to be America’s enemy, but it can be fatal to be its friend.” With this, geopolitically, while the U.S is always driven by Washington’s libido dominad – a latin phrase for the desire to dominate others, with Trump’s tariffs targeting “all countries with no exemptions, no exceptions,” the beginning of the end of America’s hegemony is closer than ever. It is now clear than ever before that what matters to Washington is not how close you’re to them. It is not their so-called “our shared values, good governance or human rights or democracy” as they normally claim. It is simply America’s interests that takes  precedence. This idea can best be understood from the words of U.S’ founding father, George Washington who in his 1976 farewell speech observed that; “No nation is to be trusted farther than it is bound by interest; and no prudent statesman or politician will venture to depart from it…unless both [nations’] interests happen to be assimilated.” 

 The writer is a senior research fellow at the Development Watch Centre.

 

 

 

Trump’s Tariffs on Mexico, China and Canadian Products: Boom or Bust?

Posted on by Ernest Talwana

As of 1st February, 2025, the U.S. President, Donald .J. Trump announced tariffs on Mexican, Canadian and previously Chinese products as a means to usher in his so-called “Golden Age” for America (U.S.). These tariffs essentially place a 25% tax on imports from Canada and Mexico which is simply a deterrence against American manufacturers buying foreign raw materials in favour of American made products and by-products under the current president’s slogan of Making America Great Again.

However, such protectionism has often been problematic as it creates a situation where equally large consumers reciprocate said tariffs against a state that initially places them. This creates an environment where the global supply chain is strained by high production costs which provide a challenge to the end consumer who isn’t as willing to meet the inflated end cost.

Equally, it should be noted that, unlike China that can be perceived as an Eastern rival to the “Free World”, Canada and Mexico are longstanding allies of the United States with partnerships stretching back into the 60s, the most recent agreement being the US-Mexico-Canada Trade Agreement, signed in 2018 that fosters free trade amongst the three North American states.

Trump’s new wave of protectionism is therefore blatant abrasive action against long standing members and would equally be met with retaliatory measures by his country’s long standing partners.

North America aside, China, Trump’s original boogeyman has long accepted her place as the U.S’s main trade enemy and has built internal capacity to bolster her economy against external aggression. The main consumer of Chinese products is China herself. If not China, her major trade partners include ASEAN states comprising Indonesia, Vietnam, Laos, Brunei, Thailand, Myanmar, the Philippines, Cambodia, Singapore and Malaysia.

These nations provide a substantial market for Chinese manufacturing thus having minimal reliance on the West. EU sanctions(at the behest of the US) on Chinese EVs provide a significant impediment to Chinese trade with Europe but this has proven nit to limit Chinese trade which relies on a variety of trade partners like Germany and Hungary to sell a significant number of Chinese products to these respective states.

China has, therefore, essentially built resilience against America’s global protectionist net.

What does this portend for closer allies like Canada, Mexico and the E.U who are Trump’s next targets?

It can be inferred that many states and regional blocs will take retaliatory measures to protect their industrial base as well as significantly showing the American consumer that trade protectionism affects the entire planet through rising costs in products such as fertiliser for farmers, food products for the hospitality industry and increasing costs of mechanical equipment.  Americans are all too aware that rising living costs pushed them to the polls to vote in favour of Trump who promised a Golden Age for America…

Protectionism, though creates an insular mindset and rather usher in a Golden Age, creates an environment where trade partners feel agitated and equally resort to protecting their own economies.

Trump’s policy doesn’t seem to be aware of how interconnected global trade is. America cannot produce all that she consumes. This means that, even while the U.S is a net exporter of natural gas and oil, she is reliant on more affordable Canadian gas to keep the cost of heating affordable for the ordinary American.. The ordinary American who voted him into power on the premise of Making America Great Again.

On the other side of the pond, Trump’s protectionism has the effect of pushing the E.U more to the East.  European states have shown that they’re willing to take the pragmatic approach to make living affordable for their own populations. This includes reopening relations with Russia as well as warming up to Chinese trade.

It is in this very scenario that burning bridges with allies may most definitely make America fall flat on their faces with tariffs that can be seen as shortsighted. Even with supposed control of the Panama Canal that Trump is agitating for, various international seaways outside of America’s backyard require more collaboration and less aggressive action to make trade smoother and more effective for the entire world(developed world if you want to be more blunt).

Simply put, it is uncertain as to whether the recently imposed tariffs on Canada and Mexico will usher in a Golden Age for America, or create a façade of control that Trump postures to have which might be further from the truth.

Ernest Talwana is a research fellow at the Sino-Uganda Research Centre

Do EU AND US Tariffs on Chinese EVS Pack a Punch?

Posted on by Ernest Talwana

On October 4th, 2024, the European Union, in line with US tariffs on Chinese EVs, voted to place tariffs on the same. This is a growing trend courtesy of the perceived threat of Chinese EVs disrupting Western markets and creating stiff competition with Western manufacturers who lack the production capacity of domestic Chinese car manufacturers.

However, these tariffs are par on course with growing western anxiety towards the behemoth that is Chinese manufacturing which has proven an unshakable force against growing Western tariffs. Outside markets like the EU and North America, Chinese EVs have popularity in larger economies in South America including nations like Brazil, Chile and Argentina, as well as a loyal middle-class customer clientele in South East Asia and mainland China itself.

In Europe as well, the voting pattern of EU members shows that not everyone agrees with imposed tariffs, Nations like Luxembourg, Sweden, Portugal and Spain abstained from the vote to impose tariffs while Germany and Hungary voted outright against imposing tariffs on Chinese EVs. It should be noted that Germany has a strong relationship with China in the automotive sector, especially due to its reliance on Chinese materials and Volkswagen, a leading German car manufacturer having a huge shareholding from China. Equally, BYD ( a Chinese EV carmaker) is establishing a plant in Hungary, which would provide plenty of jobs to the Central European nation that is seeking to limit emigration to the West by its younger populace.

Western consumers are equally receptive to Chinese EVs due to their relatively cheaper prices. Norway, a non-EU member but a member of the EEA is a particularly friendly market for Chinese EVs as the Norwegian government seeks to transition towards green mobility which includes electric and hybrid vehicles.

Generally, Western attitudes over the past decade have been towards the transition to cleaner and smarter energy which has less toll on the environment. This has spurred on a whole industry of smart technologies and vehicles in particular in an effort to combat climate change. Majority of Western car manufacturers have taken on this task with the creation of hybrid vehicle options. However, as aforementioned, industrial capacity in the West pales in comparison to Chinese industrial might which has near quadrupled Western European Industrial Capacity.

The above-mentioned tariffs can thus be perceived as a creature of American trade conflicts with an emerging power in the East. China presents as a power which can spearhead the energy transition which has the potential to leave majority of the West behind in its wake. This is a product of both Chinese output as mentioned and a coherent Chinese government policy to promote Chinese industry to both its neighborhood in South East Asia and other industrialised high income states ranging from Australasia to the Americas.

American influenced sanctions therefore can be perceived as a means to stall the Chinese wave while building internal capacity to match Chinese output.

However, this does not seem to scupper Chinese innovation, which is growing stronger and finding ways to circumvent American and EU pressure. With BYD building plants in Mexico and Brazil, there is an effort to work around tariffs placed by Western actors. Equally, China filed a complaint with the WTO questioning the parameters by which the EU determined tariffs on Chinese EVs and questioning whether any transparency existed in setting said tariffs. Equally, in a circular circulated to EU members and Turkey, China seeks to query whether said subsidies are not discriminatory towards Chinese products which, according to vehicle reviewers, are produced to the same standards as Western vehicles. The Financial Times on 2nd March 2024 reported that Chinese EVs have been found to be more reliable than US and European EVs. Their charging times are often faster and display more durability. As evidenced by market preferences.

In such an environment, it is clear that Chinese manufacturers and the Chinese government are keeping themselves adaptable in the face of the West’s anxiety concerning Chinese innovation and industrial might. Western consumers are equally receptive to Chinese EVs, which underlines the futility of Western governments’ resistance to Chinese vehicles entering their markets.

In conclusion, it seems more than likely that this chapter of Chinese-Western industrial relations is not closed, as there are more than likely plenty of sub-plots unfolding on both sides of the aisle. China equally seems unfazed in the face of impediments from the West, choosing to push on with her objectives despite hurdles presented by Western governments. The next half of this decade will determine whether the above measures will yield much or, if the West is delaying the inevitable.

The writer is a Research Fellow at the Development Watch Center.