Donald Trump 2.0: A Universal Threat or An Opportunity for Global Trade

The US economy dominates the global supply and financial market with its strong manufacturing ability and dollar acceptance worldwide. Its robust economy is driven by innovation, advanced technology, and vast resources. The dollar’s acceptance as the world’s reserve currency allows the US to set and regulate global trade.

Donald Trump’s return to power as the 47^th president of the USA has ignited a hot debate on protectionism and economic strategy. Under his leadership, the USA is about to impose a 10-20% tariff on all foreign goods coming to the USA and a 60% tariff on Chinese goods. This may benefit domestic manufacturers in the USA but affect the trade flow and international relationships. The question is, how does this approach drive growth for both exporters and importers globally? Let’s understand this.

US Import Market: Top Trading Partners and Trends

The US is one of the largest importers of goods globally, and its goods range from mobile phones and machines to pharmaceuticals, electric vehicles, and consumer goods. US imports give traders access to a larger market. However, Trump’s decision to impose tariffs will affect imports to the USA and inflate the price of goods, burdening US consumers. Here are some facts – 

1. Exports to the USA may decline as the US market becomes less attractive for trade opportunities.
2. Mexico, Canada, and China are the top exporters to the USA with $130.2, $107.3, and $106.1 billion in Q2 of 2024. These countries will need to pay additional charges to make their goods entry into the US market. 
3. China’s exports to the USA will drastically decline as under Trump’s leadership, China may face a sharp 60% tariff on exports to the USA.

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Key Chinese Products Imported By The USA 

Over the years, China has emerged as a dominant player in the US market by replacing the local manufacturers.  China’s strong manufacturing strength, cost-effectiveness, and large-scale production capabilities have positioned it as a key trade partner for the US. However, China’s strong position will shrink in terms of market share under the Trump regime with a 60% tariff on Chinese goods. The implication of this decision will affect top commodities like –

1. China’s key export products to the USA, including portable digital automatic data, smartphones, and lithium-ion storage batteries, are expected to witness a decline in trade value. 
2. The exports of smartphones, lithium-ion storage batteries, machines for reception, and toys declined by $100, $400, $100, and $300 million, respectively, in Q2 of 2024 compared to Q1 of 2024
3. Only exports of digital automatic machine data, etc. have witnessed the highest ever growth with $1.7 billion in Q2 of 2024, up from Q1 of 2024.

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What Does the US Import from Russia?

Before the Russia-Ukraine conflict, Russia’s exports to the American market accounted for a significant portion. These usually included commodities like crude oil, metals, fertilizers, and industrial materials.

However, Russian exports to Western countries declined due to conflict, trade sanctions, and removal from the SWIFT system. But, Trump’s returning to power shows a good sign that bilateral trade between Russia and America could see an uptick in movement, particularly for energy and metals, fertilizer, natural or cultural pearls, organic or inorganic chemicals, etc.

What Is Asia’s Top Export Products to the USA?

Over the years, Asia has emerged as the cornerstone of global trade, known for its fastest manufacturing capability, and export opportunities with a diverse product range.

Asia’s technological advancements make it a critical trading partner for the USA, providing key imports for industries, such as portable digital automatic data, smartphones, reception machines, etc. Here are the key insights –

• The export of portable digital automatic data increased by $2.5 billion in Q2 of 2024, compared to the Q1 of 2024.
• Parts and accessories of data processing machines and others have increased by $2.8 billion in the same quarter.
• The year-on-year increase in export value shows that Asian goods demand in the US market is increasing, providing immense opportunities for traders.

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Where Does the US Source Its Import? A Regional Breakdown

As we know EU, G-7, GCC, and Africa are the key trading blocs for supplying essential goods like machinery, energy, raw materials, and advanced technologies. The EU and G-7 are the key players in the high-value products, whereas GCC dominates the global oil supply, and Africa, which is unexplored yet full of natural resources.

For the US’s rising needs, these regions are emerging as key trade partners, strengthening and fueling industries, supporting domestic production, and many more. Here’s the US total import value from 2021 to 2023.

What Trump’s Tariff Plan May Mean for Business Community?

We have covered the US’s imports from the top trading partners until now. Let’s understand the impact on the business community and how it would affect them. Here are the trade insights –

 Increase Cost for Business –

Tariffs on the import of goods will create a domino effect in the industry and raise the price of commodities. This will force businesses to pay extra amounts for the same goods.

Disruption in Logistics Network –

With the fear of tariffs, countries will start looking for alternative supplies to ensure the free flow of goods. This causes shipment delays and impacts business profitability and efficiency.

Affect Emerging Business –

Small businesses or emerging startups will lose a market share to big companies, as extra tariff cost will not affect their over revenue and profitability, but for small ones, it will affect them drastically.

Implementation of a universal tariff on imports from the world to the USA, will not only affect the foreign countries’ exports, but it will affect the US’s local market. Hence, it becomes important to work on constructive trade policies that are neutral and respect the business community’s sentiments.