Trump tariff talk spurs global jitters, preparations

AFP, Washington :

Donald Trump’s tariff threats have rattled foreign businesses and governments, with many fearing it could signal the opening salvo of an all-out trade war when he returns to the White House next year.
The president-elect on Monday placed both allies and rivals on notice, vowing to quickly slap an across-the-board tariff of 25 percent on Canada and Mexico, and add a 10 percent tariff on China.
Following through on that threat — or his campaign promise of a 10 percent levy on all US imports — will spark retaliation and have ripple effects across the global economy, analysts say.
“Our assumption is that all these other countries, all these other advanced economies, especially in Asia, they will retaliate in kind,” economist Bernard Yaros of Oxford Economics told AFP.
US tariffs and retaliation including from Europe and Asia would “depress growth” and trade flows, he said, estimating a cut to global growth of 0.1 to 0.9 percentage points in 2026.
Even before tariffs take effect, threats weigh on sentiment and could delay investments and hiring, ING economists Ruben Dewitte and Inga Fechner warned in a note.
Trump has long viewed tariffs as a negotiating tool — or an “all-purpose bludgeon” as a recent Wall Street Journal editorial put it.
On Monday, Trump said that the tariffs on Mexico and Canada would only be removed when illegal immigration and drug trafficking to the United States are stopped.
While seeking to build US leverage, he also risks longer term impacts, with some suggesting he would push countries toward China, Columbia Law School professor Petros Mavroidis said.
“What he definitely does is alienate all his allies,” he told AFP. Erin Murphy, senior fellow at the Center for Strategic and International Studies, said in Trump’s threats “there is no differentiation” regarding countries’ economic development status or affinity with Washington.