All eyes are on US President-elect Donald Trump’s trade policies as he prepares to take office in January 2025.
Experts expect these policies to impose radical changes in international trade and investment patterns, raising concerns about their economic repercussions at the global level, according to Forbes magazine.
Significant increases in customs duties
Trump announced his intention to impose customs duties of 25% on imports from Mexico and Canada, the two largest trading partners of the United States, in addition to 10% on goods imported from China.
These duties come in the context of the “reciprocal duties” policy, which aims to match the duties imposed by other countries on American exports.
Eric Autor, a consultant at Barlow & Co. who specializes in international trade laws, stressed that imposing these fees is “a matter of time,” noting that the administration may exploit the Emergency Economic Powers Act to impose fees within the first 100 days of assuming office.
Economic impact of fees
Shannon Fiora, co-founder of Big Fiora, explains that customs duties are not borne by exporters but by importing American companies, whether they are distributors, manufacturers or retailers.
“These costs are often passed on to the end consumer, reducing profits and reducing funds for expansion and R&D,” Fiora adds.
According to Fiora, the economic impact “will be enormous,” as these tariffs reduce the competitiveness of American companies and raise the cost of living.
New trade wars?
Forbes magazine indicated that the new trade policies may lead to trade wars not only with China, but also with other countries.
“Other countries will not stand idly by,” Fiora says. “This could lead to economic isolation of the United States.”
James Zahn, a fellow at Chatham House, confirms that trade wars have a dual effect on foreign direct investment, as they encourage “redirection of investment” towards commercially stable countries, and also stimulate investments in productive infrastructure.
According to Zhan, the first trade dispute with China led to investments being directed towards Mexico and Southeast Asian countries.
It is expected that the new policies will lead to “expanding the scope of export-oriented investments and bypassing customs barriers” to include new regions.
The general direction of American policy
Although Trump’s trade policies seem more extreme, they are in line with the general direction of American policy, according to Forbes.
Autor points out that there is a growing convergence between the positions of the Republican and Democratic parties on issues such as tariffs and trade with China.
During his first term, President Joe Biden remained committed to the tariffs imposed by Trump, reflecting a growing trend of using trade policies to achieve broader political and economic goals.
Trade is expected to continue to be at the forefront of the political and economic scene under the new Trump administration. According to Shannon Fiora, using fees as a revenue-raising tool will add more uncertainty to the scope of these measures and their impact on the economy.
