With the return of former US President Donald Trump to the White House, countries around the world are preparing for a new wave of strict trade policies that may threaten the global trade balance.
According to a report issued by Bloomberg, governments around the world are planning to confront what has been described as a new “trade earthquake,” with the imminent implementation of customs tariffs that will reshape global economic relations.
Coping strategies
The report shows that countries are adopting three main strategies: proactive steps to avoid escalation, preparations to respond in kind, and cautious waiting positions.
1- Proactive steps
Bloomberg notes that some countries are seeking to reduce the impact of US policies on their economies by taking proactive steps.
Vietnam, which is one of the largest exporting countries to the United States, is increasing its imports of American products such as natural gas and aircraft, in an attempt to avoid any new tariffs.
The Vietnamese Deputy Foreign Minister stressed the importance of removing any trade obstacles with the United States to avoid escalation, especially after Vietnam was mentioned by name in the “Project 2025” policy draft prepared by Trump’s trade advisor, Peter Navarro.
South Korea and Taiwan are taking a similar approach, considering increasing their imports of US energy, including natural gas, in an effort to boost trade ties.
2- Preparations to respond in kind
China has adopted defensive strategies to face the upcoming challenges.
According to Bloomberg Analytics, these strategies include:
- Decrease the value of the yuan.
- Selling US Treasury bonds.
- Restricting the export of rare materials used in technological industries.
- Reducing its dependence on the American market by expanding its economic partnerships with other countries.
As for Mexico and Canada, the two neighbors most affected by Trump’s policies, they did not stand idly by. Canadian Prime Minister Justin Trudeau said that his country is ready to respond by imposing counter-tariffs if necessary.
In Mexico, President Claudia Sheinbaum warned that US tariffs would lead to increased inflation in the US itself, making it a harmful policy for both parties.
Mexico is also seeking to reduce its dependence on Chinese imports as part of its strategy to ease US pressure.
3- Waiting and cautious optimism
Some other countries, such as Brazil and India, have chosen to take a waiting stance rather than direct confrontation.
Officials in Brazil are confident that they will be able to direct their exports to alternative markets such as Asia if the United States imposes new tariffs.
As for India, it is counting on the good relations between Prime Minister Narendra Modi and Trump during his first term. Indian officials are considering reducing customs duties on American products as part of any future negotiations.
For its part, the European Union is adopting a dual strategy. While expressing its readiness to respond if necessary, it is strengthening its trade capabilities through new laws that give member states powers to respond to any economic restrictions imposed by external parties, according to Bloomberg.
Global economic repercussions
These new US trade policies place many countries in a complex dilemma. On the one hand, the United States calls on its allies to disengage economically from China, and on the other hand, these countries need to maintain their trade partnerships with Beijing to maintain the stability of their economies.
Frederic Neumann, chief Asia economist at HSBC, told Bloomberg, “Countries find themselves in a very difficult position between the demands of the United States and the importance of continuing relations with China. It is a crisis that requires very precise maneuvering.”
In addition, these policies are expected to have a significant impact on global markets, against the backdrop of warnings of a decline in Iranian exports by one million barrels per day when punitive policies escalate, and an increase in oil prices as a result of market fluctuations.
A world adjusting to Trump’s return
According to Bloomberg’s analysis, this new phase of economic policies will not only affect trade balances, but may lead to radical changes in the map of global economic relations.
Countries around the world now find themselves in a race against time to protect their economies from negative impacts, and prepare for a future that may witness unprecedented changes in global trade rules, according to Bloomberg.
