Donald Trump’s policy has always been oriented towards protectionism and reducing US dependence on other countries. In the event of his return to the White House, Trump intends to start a new wave of “trade wars,” which will affect not only the global economy but also countries like Ukraine.
So what is this all about?
Trade war is trade rivalry between multiple parties aiming to capture foreign markets (offensive trade war) or prevent the trade “occupation” of the national economy (defensive trade war).
Why is Trump talking about trade wars?
One of Trump’s key ideas is the slogan “Make America Great Again.” The politician believes that the US economy suffers from an influx of cheap imported goods that reduce demand for domestic production. He pays particular attention to China, with which the US has the largest trade deficit.
To stimulate production in the country, Trump proposes to increase tariffs on foreign goods, making them less attractive to consumers. This policy is aimed at bringing production back to the US but may face serious resistance from other states willing to take corresponding steps.
What does Trump’s new administration plan?
If Trump becomes president again, new tariffs could be introduced as early as 2025. According to estimates by over 50 economists, import tariffs will increase on average by 38%, and for certain goods, up to 60%. The new US Trade Minister appointed by Trump is Howard Lutnick, who has no experience in public service, adding an element of unpredictability.
However, the increase in tariffs could pose a serious challenge to the American economy as it will lead to rising prices of imported goods. According to the Third Way think tank, even a 15% tariff will increase the expenses of an average American family by 14%.
Responding to the World: China and EU Positions
China
During Trump’s first presidency, China suffered from tariffs, but now the country is prepared for potential scenarios. The government has passed the “Foreign Sanctions Law” and created a list of “unreliable entities” to have mechanisms to influence foreign companies that harm China’s interests.
European Union
The EU is also preparing for possible actions by the US. According to the German Economic Institute, if Trump imposes tariffs at 20%, the GDP of the eurozone could decrease by 1.3%. Germany, whose economy relies on exports, will be particularly affected. Meanwhile, Brussels has already prepared a list of American goods that could be subject to tariffs in response.
How Will This Impact Ukraine?
The direct impact on Ukraine will be minimal due to low trade volumes with the US. However, there are two important aspects:
- Global Price Fluctuations.
Trade wars can cause sharp changes in global markets, which is particularly important for Ukraine as an exporter of agricultural products. Prices of grains and other goods may rise or fall depending on countries’ reactions to the US actions. - Secondary Effects.
If the US starts imposing tariffs on European or Asian goods, it could affect Ukrainian companies integrated into global supply chains. For example, increased tariffs on metal or raw materials could reduce demand for Ukrainian products.
Why Do Trade Wars Matter for the World?
Trade wars undermine trust in the global economic system. They demonstrate that large states are willing to confront each other for their own interests. For countries like Ukraine, it is important to use such situations to seek new markets and partnerships.
The future of trade relations will largely depend on diplomacy. The world has already seen how such conflicts have harmed the economies of both sides, and new trade wars are unlikely to be an exception. Ukraine must remain flexible and take advantage of the opportunities that global changes bring.
