Trump's tariffs trigger global trade upheaval: BBC analysis
The decision by US President Donald Trump to impose tariffs marks the biggest change in global trade in 100 years, according to BBC News economic editor Faisal Islam. In a commentary published Thursday on the service's website, he claims that a global, yet chaotic, trade war seems inevitable.
According to Islam, two charts indicate the enormous impact of American tariffs on the world economy: a decline in stock markets, especially in Asia, and the rise in American tariff revenues, which have reached levels not seen in a century, surpassing those of the 1930s.
Here are the consequences of Trump's decision
He emphasizes that Trump's decision will significantly affect global trade channels. He predicts that the implementation of American tariffs will "break the business models of thousands of companies, factories, and possibly entire nations."
Some of the supply chains created by the world's biggest companies will be broken instantly. The inevitable impact will surely be to push them towards China, adds the BBC editor.
According to him, bringing the US trade deficit "to zero," which is the goal of American policy, means "a remarkable rerouting of world trade flows."
- Deficits and surpluses are a normal part of a functioning trade system where countries specialise in what they are the best at making. The US has now spectacularly ended that logic. But shifting factories will take years. Tariffs at this scale on East Asia especially at 30 or 40% will hike prices of clothes, toys and electronics much more quickly - notes Islam.
He questions how the world will react to this. He suspects that some European consumers may boycott products manufactured in the USA. Additionally, the dominance of large American technology companies in the social media industry could also be shaken. This is evidenced by the decline in sales of Tesla cars, owned by Trump adviser Elon Musk. At the same time, US authorities may be forced to raise interest rates to counteract the inevitable rise in inflation.
New American tariffs
Signed by Trump on Wednesday, the directive imposes "reciprocal tariffs" of at least 10 percent on goods imported from abroad.
For goods from the EU, they will be 20 percent. The rates announced by the USA are intended to account for half of the combined tariffs and non-tariff trade barriers used by other countries.
For China, the tariffs will be 34 percent (this rate will be added to the previously announced 20 percent tariffs, totaling 54 percent), Japan - 24 percent, India - 26 percent, South Korea - 25 percent.
The universal 10 percent tariff rate is set to take effect on April 5 while tariffs on specific countries will take effect on April 9.
