The United States has escalated its trade war with key global economies, imposing tariffs on China, India, the European Union, Canada, Mexico, Brazil and Argentina.
These measures, aimed at reducing trade deficits and protecting domestic industries, have triggered retaliatory tariffs, disrupting global trade and adding to inflationary pressures. The resulting economic uncertainty has affected supply chains, consumer prices and diplomatic relations, creating ripple effects worldwide.
One of the biggest trade disputes remains between the US and China. The United States has imposed 25 per cent tariffs on Chinese technology, semiconductors and consumer electronics, along with 20 per cent tariffs on solar panels and electric vehicle components.
China has responded with 15 per cent to 25 per cent tariffs on American agricultural goods, including soybeans, pork and corn, while also restricting exports of rare earth metals essential to US technology manufacturers. This has pushed China to strengthen trade agreements with Europe, Africa and Southeast Asia, seeking to reduce its dependency on American imports.
India has also been impacted by US tariffs, particularly on steel and aluminium, which face duties ranging from 10 per cent to 15 per cent. In retaliation, India has increased tariffs on American almonds, apples and medical equipment, while also boosting domestic production to reduce reliance on foreign imports. To counteract the economic strain, India has deepened trade ties with Russia and Gulf nations, ensuring a diversified import-export strategy.
The European Union has not been spared from US trade actions, with tariffs of 25 per cent on steel and aluminium and 20 per cent on key luxury exports such as French spirits and German automobiles. In response, the EU has imposed 25 per cent tariffs on American spirits, motorcycles and Boeing aircraft. This has led to a deterioration in US-EU trade relations, prompting European nations to expand partnerships with China and India to mitigate losses.
Closer to the United States, Canada and Mexico have faced significant tariff challenges. The US has imposed a 25 per cent duty on Canadian steel and aluminium, along with a 10 per cent tariff on Mexican auto parts and agricultural products. In response, Canada has implemented tariffs on US dairy, pork and poultry, while Ontario has raised electricity export prices to the US by 25 per cent. Mexico, on the other hand, has placed higher tariffs on American agricultural imports while exploring new trade alliances with Europe and China.
The trade war has also extended to South America, with Brazil and Argentina being affected by US tariffs on steel and agricultural exports. Both countries have responded by strengthening economic ties with China, Europe and other Latin American nations, reducing their dependency on the US market.
The impact of these tariffs has been felt across global supply chains, forcing companies to shift production to non-tariff regions. Rising import costs have contributed to inflation, increasing prices of essential goods such as food, fuel and household items.
With economic alliances shifting, the future of global trade remains uncertain, as nations balance protectionism with the need for economic stability.
A more measured and cooperative approach from major economies like the US and China is essential, as escalating tariffs and retaliatory measures have proven counterproductive, exacerbating inflation and economic instability.
The writer is a Chartered Accountant, currently working as Group CFO in Gulf
Oman Observer is now on the WhatsApp channel. Click here
