Trump's new tariff plan: Another escalation of the trade war

This plan is undoubtedly a major blow to the global trade pattern, especially posing a severe challenge to the relationship between the United States and its major trading partners.

Trump told reporters in the Oval Office that the new tariff measures are aimed at reshaping the United States' foreign trade relations, especially for important industries such as automobiles, semiconductors and medicines. This move is not only a direct blow to imported goods, but also a major test for the global supply chain. The Trump administration has previously imposed a 25% tariff on steel and aluminum, and this extension to automobiles, chips and medicines shows a further escalation of its trade protectionism.

According to research by the National Retail Federation (NRF), high tariffs will directly affect the prices of consumer goods such as clothing, toys, furniture, and electrical appliances, especially those with China as the main supplier. Consumers may lose up to $78 billion a year, and their purchasing power will further shrink.

The plan will hit the automotive industry first. Michigan Governor Whitmer warned that tariffs on Mexico and Canada will disrupt supply chains, increase production costs, and ultimately be passed on to consumers. Ford Motor CEO Jim Farley also pointed out that the reliance on global supply chains makes tariffs a challenge for all companies.

The National Institute of Economic and Social Research in the UK predicts that Trump's tariff plan will shrink global GDP by 2% and trade volume by 6% in five years. The size of the US economy is expected to shrink by 3% to 4%, mainly due to rising prices and reduced consumer spending.

This plan will cause countries with close trade ties with the United States to suffer significant losses. Mexico's economic size is expected to shrink by 5%, and Canada's will shrink by 3.5%. In addition, countries such as the United Kingdom, Switzerland, Hungary, Poland, Singapore, South Korea, the Czech Republic and Turkey will also face huge challenges.

This plan will reorganize the supply chain. High tariffs will force companies to reassess and adjust their global supply chains. Many companies may move production outside the United States to avoid high tariffs, but this will take time and huge investments, and may not completely replace the existing efficient supply chain.

The cost increases caused by tariffs will be passed on to global consumers through price increases, further exacerbating global inflationary pressures. The Fed may be forced to raise key interest rates to curb inflation, which will weaken investment spending and affect the global economic recovery.

The Trump administration said it hopes to discuss with other countries how existing policies have created an unbalanced trade environment through tariffs. Trump is also willing to lower tariffs if countries are willing to lower tariffs or remove other trade barriers. However, this strategy is full of uncertainty in actual operation, and companies and consumers are waiting to see how Trump will implement his decision.

Trump's new tariff plan is not only a major test for the US economy, but also another shock to the global trade system. The decline in consumer purchasing power, rising corporate costs and slowing economic growth brought about by high tariffs will have a profound impact on the US and global economies. At the same time, the reorganization of the global supply chain and the intensification of inflationary pressures will further increase the uncertainty of economic recovery. The Trump administration needs to weigh the pros and cons of tariff policies to avoid further escalation of the trade war and create favorable conditions for global economic stability and development.