Azzet asks, how many industries across what nations will be affected by United States President Donald Trump's reciprocal tariff measures, causing already volatile global markets to push into more intense turmoil?
The reciprocal tariffs are a further unwinding of free trade agreements between the U.S. and other nations (including Australia); which taxpayers, over decades, have flipped the bill for politicians to introduce.
Let's look at the main good and bad sets of possible and likely outcomes that these ongoing Trump and Biden-led tariffs will cause.
Pros:
Supports U.S. manufacturing: Import taxes, such as the 25% on goods from Canada and Mexico, are designed to increase the cost of foreign products, incentivising businesses to establish production facilities in the U.S. and generate domestic employment.
Increases government income: Tariffs have the potential to generate significant revenue - estimates suggest up to US$3.8 trillion over 10 years - which could finance tax reductions or public expenditures without hiking taxes for Americans.
Strengthens border control: The 25% tariffs on Canada and Mexico serve as a tool to push for stricter measures against issues like drug trafficking (such as fentanyl) and unauthorised immigration, framing it as a response to a "national crisis."
Balances trade competition: Matching tariffs (up to 20%) mirror other nations' rates on U.S. exports, aiming to correct trade disparities with major partners like China or the EU.
Enhances negotiation power: The threat of imposing high tariffs provides leverage to secure favourable terms from trade partners, a strategy previously effective during Trump's initial presidency with countries like Mexico and China.
Cons:
Increased costs for consumers in America: Prices of goods like cars may surge by $4,000–$6,000, while imported groceries such as coffee and seafood could jump 20–50%, disproportionately affecting lower-income families (a trickle-down effect likely for most other countries, including Australia).
Potential for trade conflicts: Retaliatory tariffs from Canada and Mexico (25% on U.S. exports) risk triggering broader trade wars, reducing access to foreign markets.
Short-term economic instability: Rapid supply chain disruptions (such as the loss of $2 trillion in trade with Canada/Mexico) could lead to recessions in manufacturing-dependent regions.
Higher inflation risk: A 20% global tariff might drive overall prices up 10–15%, reversing the progress made since the 2022 inflation surge.
Market volatility: Uncertainty could destabilise financial markets, as seen in the early 2025 stock declines, particularly impacting import-reliant companies like Walmart and Ford.
…whatever the ride is, it's likely to be bumpy.
