The world is preparing for a new tariff era within the scope of Trump 2.0

• Regulators and politicians around the world expect Donald Trump’s second term to have a major impact on trade.
• During his first term, Trump imposed tariffs on key industries in both Europe and China.

The world woke up with this news Donald Trump won 2024 elections.

For politicians and regulators around the world, this means confronting the impact a Trump second presidency will have on trade.

Trump’s “America First” policies during his first term led to trade disputes with China and the European Union, with tariffs imposed on some goods.

China’s retaliation created a stir trade war It was observed that hundreds of billions of dollars worth of customs duties were imposed on each other between the two countries.

Analysts told BI that this time Trump’s policies may have a certain impact on Europe.

“I think China is already facing significant tariffs and is adjusting, but Europe hasn’t faced them yet. So if Trump implements global tariffs, Europe would be hit hard,” said Bilal Hafeez, CEO of macro marketplace Macro Hive. research firm.

Trump’s proposed tariffs

“To me, the best word in the dictionary is ‘tariff,'” Trump told an audience at the Economic Club of Chicago in October. Wall StreetJournal reported.

During his first term, Trump repeatedly accused the EU of unfair trade policies and said it was “very, very difficult” to get US products into the economic bloc.

It imposed tariffs targeting key European sectors such as steel, aluminum and some luxury goods.

During his campaign he committed to It decided to impose a general customs duty of 10% on all imported goods and imposed a customs duty of over 60% on Chinese goods.

Nigel Green, chief executive of financial consultancy firm deVere Group, said Europe was particularly vulnerable to Trump’s aggressive trade policies for two main reasons.

First, many European companies, especially those operating in the manufacturing, luxury goods, automotive and technology sectors, are heavily dependent on US markets. Tariffs would significantly increase these companies’ costs and reduce their market share and overall valuations in the U.S., Green said.

He said Europe currently faces a number of economic and political challenges, including high energy costs, slow economic growth and geopolitical instability.

“A new trade war with the United States under a Trump presidency could worsen these problems and further destabilize the region’s economy,” Green said.

Analysts also say Trump Reduced financial aid to UkraineEurope will have to spend more on the conflict.

At the same time, the continent will suffer the knock-on effects of tariffs on China, meaning cheaper goods will be diverted to the Chinese market.

Pharmaceuticals, automotive and chemical products, which represent the lion’s share of EU exports to the US, are the sectors most exposed to potential tariffs, according to Morningstar DBRS.

If Trump increases tariffs on foreign goods, he would increase the risk of retaliation from other countries, which could global economic growth and fuels inflation.

“The real fear among market watchers is that Europe will quickly retaliate, as it did during Trump’s first presidency,” Green said.

“While European stocks may take the initial hit, the real blind spot lies in U.S. companies with significant exposure to European markets.”

“Technology companies, consumer goods giants, luxury brands and automotive companies that derive the majority of their revenue from Europe could be caught in the crossfire,” Green added.

“Time will tell whether Trump’s ‘bark’ is worse than his ‘bite’, we are still a few months away from Inauguration Day but the election results will make these months very tense indeed for European policymakers,” said Michael Brown. Senior research strategist at Pepperstone.

Ahead of results, European stocks exposed to US tariffs There have already been sharp declines and underperformed the broader market.

When the results came on Wednesday morning, European markets Although the gains decreased as the day progressed, it entered an upward trend led by US futures.

On Wednesday morning, European Commission President Ursula von der Leyen congratulated Trump. a post on x He called on Europe and the United States to work together, calling them “more than allies.”

The rest of the world may suffer

Outside of Europe and China, the effects of Trump’s proposed tariffs could also be felt acutely in both Australasia and Latin America.

Australia’s Treasury Department’s most senior civil servant, Steven Kennedy, said on Wednesday he expected Trump’s tariffs to impact the country’s economy.

“A significant increase in tariffs will have implications for both the US economy and China, and will have ongoing consequences for Australia.” Kennedy said during a senate hearing, according to News.com.au.

“In a very broad sense, the imposition of trade restrictions such as tariffs generally leads to lower growth and higher inflation,” he said.

In Latin America, ratings agency Fitch warned last week that new tariffs under a second Trump administration would have a major impact on the United States’ closest neighbor, Mexico.

Mexico’s economy relies heavily on trade with the United States, its largest economic partner. Fitch said tariffs on this trade would likely reduce GDP.

“Aggressive U.S. unilateral tariff increases would lead to a decline in Mexico’s GDP of 0.2% to 1.9% relative to our baseline expectations,” Fitch said. Reported by Latinvex.