Countries all over the world are up in arms and yelling foul at the United States’ protectionist tariffs that have just been placed on foreign goods. The US government has slapped punitive tariffs on selective imports of a long and varied list. As expected, this decision has drawn fierce backlash from trade allies, most notably in Asia, Europe and North America. Currently, the tariffs range between 10% and 50%, depending on what country and what type of goods you’re talking about. Many are concerned that these tariffs would lead to a trade war, disrupting global commerce and harming global markets.
The Thai government responded to the imposition of the US tariffs by officially expressing its disapproval. With their opposition, they illuminated the harmful consequences that these levies would have on every trading partner and American consumers. The levies will certainly impact all of their trading partners. It will be American consumers who suffer the worst, as they may be less able to adjust to the abrupt increase in costs. Thailand has shown its intent to act in good faith and cooperate with the United States to reach a mutually beneficial trade balance.
The US responds by imposing a punitive 20% tax on all goods imported from the European Union. On top of that, there’s a 10% tariff on all foreign incoming goods. This move raises the top tariff on certain imports to over 50%. Nowhere will the impact be felt harder than China and South Korea. China has been hit the worst, experiencing an average total levy of more than 50% on its exports. The Chinese government’s statement was very forceful. As they put it, “There is no winner in a trade war, and there is no way out for protectionism.”
Responses from Asia
Taiwan’s cabinet has condemned the US tariffs as “very unreasonable,” focusing on the severe economic impact this would have on the island nation. Taiwan’s economy surged last year with a trade surplus that came to nearly $74 billion. Exports are the lifeblood of the country, accounting for over 60% of the country’s GDP. The US recently announced a whopping 32% tariff on Taiwanese exports, further straining relations between the two countries.
Similarly, South Korea is in the crosshairs of a 25% tariff on its exported automobiles to the US. Imports aside, last year South Korea’s automotive exports to the US totaled $34.74 billion. This incredible number represented almost 50 percent of the country’s total car exports worldwide. Meanwhile, the South Korean government is reportedly panicking over the impact this will have on its economy. On one hand, former Australian PM Anthony Albanese has condemned the US’s strategy on reciprocal tariffs, calling it out as “President Trump talked about reciprocal tariffs. A reciprocal tariff like the one proposed would be zero, not 10%.”
India’s case is a bit different as it has gained exemption from tariffs on pharmaceuticals, an essential sector for India’s economy. A commerce official remarked that it is “a mixed bag and not a setback for India,” indicating a cautious optimism about maintaining essential trade flows.
North America Reacts
Equally striking has been the response from our Canadian neighbors. Although Canada has been exempted from the latest round of tariffs, it still faces significant levies of 25% on steel and aluminum imports. Canadian officials have made clear their concerns over the long-term impact of such tariffs on US-Canada relations. Australia’s new Prime Minister Albanese said the administration had let them down. He concluded that “the administration’s tariffs are completely devoid of any logic and they undermine the very premise of our two countries’ partnership.” This is not how a friend acts.
Mexico is in a complicated position. Although exempt from the latest round of tariffs, it is still subject to earlier imposed tariffs. Continuing to threaten a 25% tariff on all Mexican exports further worsens the already shaky trade relationship with the US. This move only escalates the pressure cooker between the two nations.
Economic Consequences
Yet the broader economic implications of these tariffs are just beginning to take shape around the world. New Zealand’s Prime Minister Christopher Luxon highlighted that exporters in his country face about NZ$900 million in tariffs, which will ultimately be passed on to American consumers. For NZ exporters that’s about $900 million worth of tariffs. Sadly, this burden will be 100 percent paid by US consumers.
Market analysts are preparing for an Asian equity market rout from these trade conflicts. We are going to be looking at a very, very tough open for Asian equity markets this morning,’ said Tony Sycamore of IG Australia. He continued, “Get ready tightly friends … we are in the dark uncharted waters,” echoing the anxiety spreading like wildfire through international markets.
The American Chamber of Commerce in Taiwan issued a release reaffirming the importance of US-Taiwan relations. This is especially welcome and timely, with geopolitical complexities. They stated that amid a rising geopolitical complexity, the US-Taiwan partnership continues to be one of the most important engines of shared economic prosperity. It’s one of the most important U.S. policies for achieving supply chain security and long-term regional stability.