This is far from being the only threat raised by the new administration: during the campaign, the president-elect promised to increase customs duties on all imports to 10% and 60% for China. At the end of December, he also demanded that Europeans step up purchases of American oil and gas. “Otherwise, it will be customs duties,” Donald Trump posted again on his favorite network.
A cost estimated at 0.5% of global GDP
Even if the real extent of the measures adopted by the future administration remains uncertain, the United States’ trading partners do not have many illusions. This resurgence of trade tensions risks further weighing on growth forecasts in Europe, already weighed down by sluggish domestic demand. More dependent on its exports, Germany could see its GDP reduced by one point by the end of Donald Trump’s mandate in 2028, in the worst scenario. According to economists from the Center for Prospective Studies and International Information (Cepii), world GDP could fall by 0.5% by 2030 and world trade could contract by 3.3% in volume.
For China, the cost would be even more massive. A 60% increase in American taxes on Chinese imports could reduce them by almost 80%, write the economists at Global Sovereign Advisory. “The losses would represent 2.2% of Chinese GDP; of which a little less than half for only two sectors: machines and laptops,” they point out in a note, with cascading consequences on the country’s economic partners.
Everything will of course depend on the final calibration of the measures adopted by the new administration, beyond the fiery declarations. Economists have already warned that rapidly increasing all customs duties risks causing American inflation to soar, while local manufacturers are already facing difficulties finding skills. But many expect a more rapid and brutal implementation of protectionist measures than under the first Trump administration, which approved 300 billion euros in surcharges on Chinese products and imposed customs duties on all Chinese imports. steel and aluminum in the name of national security.
Europeans toughen up their tone
The Europeans, for their part, are still looking for a solution to this new wave. To avoid a head-on trade war, European Central Bank President Christine Lagarde called for avoiding retaliatory measures and acceding to Washington’s demands to import more American LNG.
In fact, the context has tightened considerably since 2017. From mid-October 2023 to mid-October 2024, the World Trade Organization (WTO) counted 169 new trade restriction measures adopted around the world, which concern 887 billions of dollars in trade. In total, the WTO estimates the volume of world imports affected by protectionist measures to be $2,943 billion, or 11.8% of the total compared to 9.9% over the same period twelve months earlier and 4.2% in 2017, at the start of Trump’s first term. Export restrictions, such as the ban on deliveries of gallium and germanium to the United States by China, are also increasing and now concern more than 3% of global exports.
Stock up before taxes
Faced with Chinese overcapacity, Europe itself is raising its voice. In 2024, it validated tax increases on Chinese electric vehicles to compensate for the public subsidies received by its manufacturers and anti-dumping investigations are increasing. The European Commission is expected in 2025 to review the steel safeguard mechanism, put in place in 2018 to avoid a surge in steel exports to Europe after the closure of the American market, which will have to be sustained.
Businesses, for their part, will have to adapt as quickly as possible. Some have already reviewed their supply chain. Others are trying to gain time, in anticipation of the measures announced in January. Since mid-December, freight prices to the United States from China have increased by 17% to the East Coast and 26% to Los Angeles. Before taxes, importers prefer to stock up.
Source: www.usinenouvelle.com
