Immediately after US President Donald Trump announced new customs duties affecting many countries of the world, in a move described as “liberation day”, global financial markets witnessed a remarkable decline, which included indicators of American, European, Asian and Arab stock exchanges, and this indicates widespread concern about possible repercussions on the global economy. Oil and gas prices also declined.
This step, which included the imposition of customs duties on imports of about 90 countries, in addition to a 10% tax on the total imports to the United States, was attached to a “national emergency” state, according to the US President, who justified it with the need to address the American trade deficit with its trading partners, from China to the European Union, according to CBS News.
In an escalatory step, Trump imposed additional 34% additional fees on Chinese imports, and it is added to previous fees of 20%, making China one of the most affected countries in this policy. Beijing was not late in the response, after which it announced customs duties for the same on American products as of April 10.
These developments raise pivotal questions about the possible effects of these procedures:
- What gains do the US administration expect to achieve these fees?
- What are the possible losses on the American economy and the local consumer?
- Can these policies be considered an effective step towards achieving the slogan “America First”?
Possible gains according to the estimates of the American administration
- Customs returns may exceed 6 trillion dollars during a contract
According to the Trump administration, the new customs duties are expected to generate revenues in excess of $ 6 trillion during the period between 2025 and 2035, which are attributed to White House advisor Peter Navarro, according to CNN.
Trump also indicated in his statements that some of these fees may achieve more than one trillion dollars during the next year, and this may contribute to reducing the national debt or even compensating part of the income taxes, according to the CBS News. He added: “You will see billions, and even trillion dollars enter the country close to customs duties.”
- Additional revenues from the auto sector
In a press conference, the Secretary of the White House employees, Will Scharf, estimated that the customs duties imposed by 25% on imported cars and spare parts may achieve revenues of approximately $ 100 billion. Meanwhile, Trump indicated that the expected returns may reach between 600 billion and a dollar in a relatively short period.
But, according to estimates of the budget laboratory at Yale University, a non -partisan research center, the expected returns from car fees may reach between 600 and 650 billion dollars over a period of 10 years, and this indicates a clear difference in estimates between administration and independent institutions.
- Try to reduce the American trade deficit
The American Statistical Office data indicate, according to Forbes magazine, that the US trade deficit in 2024 amounted to $ 1.2 trillion, the fourth consecutive, which exceeds the trillion barrier. Meanwhile, American exports increased by 2.3% to $ 2.06 trillion, while imports increased by 6.08% to exceed 3.27 trillion dollars.
The Trump administration sees in the new fees a tool to pressure the US trading partners to reinstine more balanced trade relations. Dr. Chen Xi Min, a professor at Taiwan National University, says that the fees are not a goal in itself, but rather a way to stimulate negotiations, noting that Trump uses the formula of “mutual definitions” based on the trade deficit with each country.
- Motivating local industry and increasing employment
The White House data indicates the creation of 9,000 new jobs in the auto sector recently, and 10,000 jobs were created in the manufacturing sector in the first month of Trump’s assumption of the presidency, compared to a monthly loss of 9,000 jobs in the last year of the administration of former President Joe Biden.
Trump hopes that customs duties will reduce dependence on foreign imports and motivate companies to re -manufacture in American territory, which may contribute to raising employment rates and strengthening the industrial sector.
- Possible political repercussions on Trump’s electoral opportunities
Trump is betting that these measures will be shown by the appearance of the defender of the American economy, as he described the imposition of fees as “liberation day”, in reference to the United States restoring its economic rights, according to the “Center for Strategic and International Studies” (CSIS). It is considered that the commercial deficit not only reflects an economic imbalance, but also a strategic default that spanned decades.
While he sees in this approach a step towards “saving” America, he hopes that this will be reflected in his political opportunities, expressing explicitly his desire to run for a third presidential term, as reported by the New York Times.
Challenges and losses resulting from new customs policies
- Money markets are affected and heavy losses to American companies
The American markets witnessed a sharp decline after the announcement of the new fees, as the major technology companies, known as “Magnificent 7”, lost about $ 1.8 trillion of their market value in just two days, according to the Associated Press.
Apple was the most affected, with a loss of $ 311 billion in its market value within one day. Other companies operating in the fields of agriculture, space and heavy equipment were also damaged, especially those that depend on the Chinese market.
- Possible inflationary pressures on the American economy
The President of the Federal Reserve (the US Central Bank), Jerome Powell, warned that these fees may raise prices and slow economic growth, in violation of the US administration’s expectations to reduce prices.
Powell stressed that the additional costs resulting from fees are often borne by the American consumer, which is agreed upon by many economists who indicated that these fees are ultimately reflected on the prices of daily commodities.
- Additional burdens on the American citizen
The Los Angeles Times reported that American consumers, not foreign exporters, are actually bearing new customs duties, and this leads to high prices of basic products, from cars to electronic devices.
- Negative effects on the agricultural sector
Agriculture is one of the most American sectors depending on export, and American farmers have been in losses of $ 27 billion during Trump’s first state as a result of reprisal fees, according to Reuters.
To reduce the impact of these losses, the US government spent $ 23 billion as rescue payments through the commodity credit institution, according to the Politico platform. Revenge fees are often targeted by agricultural commodities such as soybeans, corn, wheat and meat.
- Limited results for local industries
According to economic studies conducted by the Federal Reserve and American Universities, the protected local industries have achieved only modest benefits from these fees, while the American consumer bears the largest burden, especially during the period 2018-2020.
- Warnings of long -term repercussions
In an article in the newspaper “Los Angeles Times”, researcher Veronik de Roger, from the Mercatos Center at George Mason University, saw Trump’s fees “worse than gambling”, noting that possible damage exceeds the gains.
She added, that adopting policies based on “economic nationalism” may lead to disturbances in the market and slowdown in growth, and stressed the importance of returning to stable commercial relations and open markets as the best way to sustainable economic growth.
The new commercial policies announced by President Trump show an aspect of economic and political ambition, which aims to redraw the features of global trade from a purely national perspective. While the US administration is counting on possible benefits related to customs revenues, large local and international economic challenges can be weakened by these gains.
In light of the attraction between those who support these policies as a strategic necessity, and those who warn of their repercussions, the real impact remains subject to tangible results in growth rates, the reality of the market, and the standard of living of the American citizen.
