Trump's tariff war: A new era of global economic tension

U.S. President Donald Trump will announce the details of the reciprocal tariff mechanism on Wednesday evening at approximately 8 PM Greenwich Time. Trump's plan regarding U.S. tariff policy is viewed as an escalation of the trade war. From the outset, the American president has insisted that the principle of the new tariffs should be simple: "whatever they take from us, we will take from them." Initially, discussions were about U.S. duties on countries with which they have the most significant trade deficits.

On Sunday, the American president announced that tariffs could cover "all countries." "We are going to be very nice by comparison to what they were. The numbers will be lower than what they have been charging us, and in some cases, maybe substantially lower," Trump declared.

The "Washington Post" reported that White House advisors have prepared a plan expecting a 20% tariff on most imports to the United States. Meanwhile, Secretary of State Marco Rubio has announced that the new tariffs are intended to form a new basis for bilateral negotiations with partners.

Wojciech Jakóbik, an analyst from the Energy Security Center, emphasizes that we do not know what Donald Trump will announce on Wednesday.

"And what he'll 'launch' this time," says Jakóbik. We also do not know what the effects of his decisions will be. The American president is unpredictable and can change his mind daily," he notes.

In his opinion, if the tariffs cover all goods, the impact will be global and difficult to predict.

"If it hits the majority of imports to the United States, he will get a counterpunch." And that's because tariffs in the energy and fuel sectors would also strike at Trump's "drill, baby, drill" policy. Donald Trump plans to push for significant energy policy reforms and break away from the previous Joe Biden policy. According to the Energy Security Centre analyst, America's partners may respond by seeking resources elsewhere.

Meanwhile, Daniel Boćkowski, a specialist in international security and a professor at the University of Białystok, believes that no one will benefit from Trump's decision.

"Like in the 1930s, in the case of the American tariff war. Back then, we did not have a global economy, and yet the effects were disastrous for the world. Currently, we have a structured economic circulation and a chain of trade exchanges, so Trump wouldn't necessarily manage to force from other countries what the USA wants," says Prof. Daniel Boćkowski.

According to the expert, the announcement of tariffs is more for domestic consumption. "Trump wants to show Americans that he is doing everything to make things better for them,” says Boćkowski.

Some economists compare it to the tariff hikes made by the USA during the Great Depression, under the Smoot-Hawley Tariff Act of 1930. The previous tariff hike extended the global economic crisis. It should be noted that part of the tariffs has already been temporarily introduced by the USA and concerned products from Canada and Mexico.

This time, however, they would also cover products from the European Union. "We do not want retaliation, but we have a strong plan for such actions, if necessary," said European Commission President Ursula von der Leyen on Tuesday in the European Parliament.

It should be recalled that in mid-March, the U.S. administration already announced a 25% tariff increase on EU steel, aluminium, cars, and automotive components. Other sectors, such as pharmaceuticals, semiconductors, and wood, are also to be affected by this policy. In response to these tariffs, the EC announced the imposition of retaliatory tariffs by the EU on goods from the United States with a total value of £23 billion.

As Prof. Daniel Boćkowski reminds us, the European Union is a traditional enemy for Trump's electorate.

"Also for businessmen associated with the Republican leader. For them, the Union is an economic structure that prevents actions and making deals with individual countries. Already during his first presidency, Trump did not hide that breaking up the European Union was a goal of the United States. He wanted to remove one of the big players from circulation. We currently have a continuation of this policy, internally breaking up Europe," asserts Prof. Daniel Boćkowski.

He emphasizes that if Trump imposes tariffs on Europe, Europe will respond in kind. "There is no mercy here. If only because we cannot afford actions where we are attacked unilaterally. Every tariff in both directions will complicate our lives. Unfortunately, the European Union will have a problem, because 'some' of these goods are linked to the USA. In the other direction, there is less. But this serves no one, as it will be passed onto the consumer," assesses the professor from the University of Białystok.

"Companies will not pay higher tariffs; the recipient will pay, and they will have to spend more. We are facing a chilling effect. Trump has decided to act solely from the point of view of strength. He believes that America will be great when everyone is afraid of it," adds Boćkowski.

In his assessment, if Trump imposes tariffs on everything, not all companies and businesses will suddenly move to the United States.

"America is too weak for that. There is not enough infrastructure or production lines there. As a result, some products will disappear, and some will become more expensive." The strength of Trump's America is not the strength of Ronald Reagan's era. And it might face a strong response from many countries, argues Boćkowski.

Wojciech Jakóbik reminds us that we are nearly 100 years past the tariff war initiated by the Americans, which had catastrophic effects.

"But now we are living in different economic and political realities. Copying those decisions cannot be effective. It results from domestic political needs. Donald Trump is a hostage of his slogan, 'Make America Great Again.' However, going to a tariff war may not make it great and will only gain it enemies," Jakóbik summarizes.