On April 2, US President Donald Trump issued an executive order introducing a basic customs tariff of 10% on all imports from all countries to the US, and introduced increased individual reverse tariffs against several dozen countries with which the US has the largest trade deficit. In addition, a tariff of 25% was introduced on automobile imports. All this was called “US Liberation Day,” writes Tax Committee Chairman Daniil Getmantsev.
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What does this mean for the world and countries
1. Decades of rules-based global trade (WTO) are gone. The risks of a massive trade war lie ahead – the world's largest economies will certainly not sit idly by and let a unilateral increase in US tariffs (however justified) go unanswered.
2. Large global corporations will try to circumvent tariffs by moving production to the US (where they are counting on it), many countries will try to negotiate with the US unilaterally by lowering tariffs, but for the US this is a very risky strategy. It may not work, worsening the country's isolation on the continent.
3. The direct and obvious consequence is rising prices and global inflation, a slowdown in world trade, disruptions in global value chains and, as a result, a slowdown in global economic growth. All these conclusions are true for both the global economy and individual countries, which will face rising inflation, falling public welfare and declining economic growth.
4. Ukraine is not on the list of countries subject to the increased individual reverse tariff, i.e. the basic duty of 10% will apply. It will be interesting to know the position of the Ministry of Economy regarding reverse actions, if any. In theory, this step will lead to more expensive imports, higher prices, an increase in the trade deficit and will negatively affect economic recovery.
“We’ll see how it goes, of course, but trade wars very rarely lead to positive mutual results,” Getmantsev concluded.
Let us recall
US President Donald Trump announced the introduction of duties on all imported goods. The Republican announced this on Wednesday, April 2, at a press conference in the White House garden. The basic tariff will be 10%, but for many countries it turned out to be higher.
Duties on goods from China will be 34%, from EU countries – 20%, from Switzerland – 31%, from Great Britain – 10%, from Ukraine – 10%, from Israel – 17%, from Kazakhstan – 27%. One of the highest duties is imposed on Vietnam (46%), Cambodia (49%), Laos (48%). Russia is not mentioned in the list.
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- USA Economy