'Are we on the brink of another trade war?' Nahied Rezwani Director & lecturer at Hogeschool Inholland wonders. During President Donald Trump's first term, tariffs of 25% on steel and 10% on aluminium were imposed in 2018 to safeguard domestic industries. However, these measures triggered significant economic consequences, including rising costs for consumers and businesses, disruptions in global trade, and retaliatory tariffs from other nations.
Research conducted after their implementation revealed that while the tariffs provided some protection for the steel industry, they also caused volatility in other sectors, leading to job losses and increased production costs. Although trade agreements like the USMCA helped ease some tensions, the tariffs remain in place amid an uncertain political climate.
With Trump's proposed plans for 2025 targeting a wider range of countries, including China and Europe, Rezwani wonders whether another trade war is on the horizon.
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Trade disputes are nothing new, according to Rezwani. One of the most infamous examples is the Smoot-Hawley Tariff Act of 1930, which imposed high import duties, prompting international retaliation and a severe decline in world trade. The resulting economic downturn exacerbated the Great Depression, demonstrating how protectionist policies can have unintended consequences.
Fast forward to 2025, and Trump has once again proposed increasing tariffs, this time extending to a broader range of countries, including China and key European nations. Experts warn that such actions could escalate tensions and destabilise the global economy, leading to price increases and supply chain disruptions.
The ripple effects of these tariffs have extended beyond the US. Canada and Mexico, major suppliers of American steel imports, suffered economic losses and responded with their own tariffs on American goods. This tit-for-tat approach has created uncertainty in international trade, making it harder for businesses to plan and invest confidently.
Additionally, global supply chains have been disrupted, with studies indicating a 5% increase in costs due to tariffs. Delays in materials, higher transportation expenses, and fluctuating prices have made procurement more complex for designers and manufacturers alike.
Beyond the financial implications, trade conflicts have heightened geopolitical tensions. Trump's renewed focus on tariff increases, particularly targeting European and Chinese markets, risks sparking further retaliatory measures. This instability could lead to slower economic growth, impacting industries reliant on imports and exports.
Read the full report here: www.linkedin.com.