Newly inaugurated President Donald Trump has reignited his commitment to aggressive tariff policies, aiming to shift the tax burden from Americans to foreign nations. In his inaugural address, Trump proposed bold measures, including a 25 percent import tariff on Mexico and Canada, while hinting at a sweeping overhaul of the US trade system.
Analysts at Nomura predict China will face the steepest tariff increases among global trading partners, followed by Europe, Asia, and others. The current effective tariff rate on Chinese goods stands at 10–11 percent, but this is expected to surge by 35 percentage points to a maximum of 60 percent (excluding some EV-related goods, which could see tariffs as high as 100 percent).
3-Phase rollout mirrors 2018-19 strategy
The tariff hikes on Chinese goods are likely to be implemented in three phases over the course of the year. This approach mirrors Trump’s 2018–19 negotiation strategy, designed to avoid the economic shock of a one-time increase while maintaining pressure on trading partners.
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For other nations, analysts expect additional tariffs to take effect mid-year, though countries with free trade agreements, such as Canada and Mexico, may not be fully exempt. Mexico, in particular, could still face tariffs due to issues like fentanyl imports and border security concerns.
Uncertainty looms over tariff scale, scope
The final size and scope of the tariff increases remain unclear. Analysts note that Trump’s objectives now extend beyond addressing trade deficits and national security concerns. He views tariffs as a significant revenue source for the federal government, despite their current minimal contribution.
Trump has also signaled plans to pressure US trading partners to align their tariff rates on US exports with those imposed on their imports. Given the global variation in tariff structures, this could lead to uneven increases among trading partners, creating further complexity in international trade dynamics.
In the months ahead, the phased implementation and evolving scope of these tariffs will likely reshape US-China trade relations while impacting global trade frameworks.
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