Trump’s trade war is more than trade

Trump’s actions have done many in the US and around the world are wondering: What exactly are invoices and how do they affect world trade? Simply put, invoices are taxes on imported goods. If a Chinese manufacturer wants to sell shoes in the US, the US government can impose an invoice. If a US retailer pays $ 100 for a couple then a 10 percent invoice, such as the one recently Trump imposed Concerning goods from China, it means that the retailer has to pay the US government $ 10.

These $ 100 shoes now cost $ 110. Who pays the extra $ 10? When Trump increased invoices Chinese imports During his first term, American importers brought most of the cost, especially when they could not find alternative suppliers. Consequently, retail prices remained relatively stable, at least in the first year.

But the picture becomes more complicated when invoices remain in force for a long time. US importers cannot absorb the additional costs indefinitely and may be removed from the business unless they find new suppliers or transfer these expenses to consumers, who may then reduce costs.

When one country uses invoices or other sanctions to harm the economy of another country, the result is often retaliation and trade war. China, for example, responded to Trump’s invoices by imposing its own invoices to US imports. However, although Chinese and American invoices are based on similar reasoning, their impact will not necessarily be themselves.

During the first US -China Commercial War, most of the weight of China’s retaliation is borne by American exporters instead of Chinese imports. This is due to the fact that China quickly found alternative suppliers for the goods previously promoted from oil and US food – two of the US top exports to China – were easily provided by Russia and other countries. Meanwhile, the US has struggled to replace Chinese imports, forcing US companies and consumers to bear the burden of Trump’s invoices.

These consequences have not gone unnoticed. Under Trump and the former president Joe BidenThe US has taken steps to encourage domestic production and encourage businesses to reduce their dependence on Chinese supply chains. But the degree to which such efforts will allow the United States to shift the load of invoice in China remains unclear.

Of course, the huge size of the US market gives it an important advantage. While Chinese importers can find alternative suppliers, Chinese exporters will find it difficult to find a market that can fully replace the US the combined GDP of Russia, India, Africa and South America 13 trillion $-For over one third of our GDP, which is expected to rise 30 trillion $ In 2025. And if the US persuades its allies in the OECD to join the trade war, China could face tariffs from countries representing 46 % of the world economy.

Trump’s administration bets that because the US is the largest economy in the world, China and other foreign exporters will fight to find sustainable alternatives. This, in turn, would give the American decisive leverage in the trade war between the two countries. The first signs indicate that Trump’s strategy can deliver at least symbolic victories, with Mexico and Canada seemingly agreeing with his demands he promises to do what they already did.

Taking this, invoices are often a double sword. On the one hand, the victory of the trade war with China would allow the US to negotiate better terms of trade. But American households could pay a heavy price. Fewer goods will be produced and sold to US consumers. While reduced imports could enhance the competitiveness of domestic manufacturers, the highest cost of production and the absence of foreign alternatives may lead to consumer prices.

The potential geopolitical benefits of Trump’s trade war are less ambiguous, as its administration has decided to use financial pressure to achieve wider strategic goals. It seeks to push Mexico and the countries of Central America from preventing immigrants from the US southern border and to accept deported immigrants and to You oppose China’s growing influence in the Asia-Pacific region and the withholding of Chinese expansionism, especially in the sea of ​​southern China. In addition, Trump has promised to “retake“Panama’s channel and it looks serious about the Greenland market for its strategic location and natural resources – a US ambition Return to 1868.

Consumers and manufacturers in the US, China and beyond them to increase for price increases and escalation of geopolitical tensions. If the Democrats regain control of Congress in the 2026 interim elections, in which one third of the US Senate and the entire House of Representatives will be in the vote, they could destroy Trump’s ability to impose invoices. This gives Trump two years to win his trade war with China and the rest of the world – or at least convince Americans that it is worth costing.

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This article first appeared in Workshop.