The election of Donald Trump can launch a new wave of trade wars. Its economic policy with an emphasis on increasing import tariffs is able to significantly change global trade and cause economic tension between the largest economies in the world.
Donald Trump is convinced that the import of cheap goods is damaging to the American manufacturer and increases the lack of trade balance of the United States. High import tariffs, he said, should make foreign goods less competitive, stimulating production within the country.
In his election campaign, Trump promised to radically raise tariffs, which could start in 2025. Economists are forecasts, the average tariffs can reach 38%, and in individual sectors - from 15%to 60%.
The most new trade duties can hit China - the largest trading partner of the United States. Although China has already prepared legislative mechanisms for response to sanctions, such as "Anti -Foreign Panctions Law" and "List of Unreliable Entities", a new wave of trade conflict can slow down the growth of the PRC economy.
China can answer asymmetrically by limiting the export of key resources such as rare metals that are critical for modern technologies, or expanding sanctions against US companies.
The European Union may also be affected if the US has duties on European goods. The EU answer in the form of similar tariffs will cause economic losses for both parties. It is projected that the introduction of 20% of duties on US goods can reduce EU GDP by 1.3%.
For Ukraine, the consequences will be less noticeable because of the small volume of trade with the United States. However, global fluctuations in raw material prices caused by trade wars can have an indirect impact. For example, changing prices for agricultural products can help and damage Ukrainian exports.
The growing protectionist sentiment of Trump is likely to slow down the processes of globalization. Refusing to open markets and the introduction of rigid tariffs can destabilize the world economy, leading to a decrease in growth in many countries.
