Trump’s Tariffs May Have Reached Their Peak Impact

One of the most harmful impact of Trump’s tough tariff policies to the U.S. economy can still be seen in the overall condition of the country. As a result, the country which benefits the most from the tarrifs is the one to pose the question that is causing a lot of confusion among experts and policy-makers. Have these measures reached their peak or will there be another wave of protectionism? The tariffs that once radically changed global trade are now seeming to be at a crossroads, with the recent variations signaling that they might have already exerted their greatest influence.

The Rise of Trump’s Tariffs

One of the first few things that come to most people's minds regarding the trade war between China and the U.S. is the announcement made by Donald Trump, the President of the United States, in 2018. The announcement was that tariffs will be imposed on imports of American goods across diverse sectors with the primary goal being the protection of local industries and the US trade deficit reduction. The targets were mainly the cheap imports from China, Mexico, the EU, and other leading trading partners in such products as steel and aluminum, apart from that, tariffs were also imposed on Chinese goods worth hundreds of billions.

The idea was to use the tariffs as a way to put pressure on trading partners so that new deals with the U.S. could be negotiated and U.S. manufacturing can be preserved. As an example, the steel and aluminum sectors were able to experience some gains, albeit temporarily. Most consumers and businesses, however, have felt a price increase due to the tariffs. Also, the trade war got escalated because of the retaliatory tariffs imposed by other nations, which have affected U.S. exporters negatively.

Is This the ‘High-Water Mark’?

Changes in Trade Policies Under Biden

A softer and more diplomatic manner is being used under the Biden administration in trade negotiations while the U.S. is still keeping some vital tariffs. Activity focus lays on agreement renegotiation and China's and other customers' easing of relations. The elimination of some tariffs is seen as a step away from complete protectionism towards a more open one.

Conflicts in Trade Are Being Solved

It's become quite easy and quick for the parties to agree on the negotiation table and the results this time are more positive than previously. Good illustration of this is the 2020 Phase One trade agreement between the US and China where the latter committed to buying more American goods and reducing tariffs to a small degree. Still, a few issues remain, but the period of the aggressive raising of tariffs is over.

Market Responses and Supply Chain Changes

Against the backdrop of these tariffs, the US companies have tendered themselves more agile by disintegrating supply chains that became victims of the levies, sourcing from locations that are scarcely or not at all subject to constraints, or absorbing the escalated burdens on their side. It should be added that also elevated prices and difficulties in supply chains have made the authorities rethink the real economic impact of high tariffs.

Economic and Government Data :

The most recent trade data are indicative of a reduction in disruptions caused by tariffs. At the same time, the US government has been placing more emphasis on creating strategic partnerships and mutual beneficial trade agreements—both signs of a move away from using tariffs as a unilateral pressure tool.

What Is Coming Next: Protectionism or Pragmatism?

There are reasons to be sure that tariffs will not be removed completely and that they will be maintained at a certain level or gradually lowered; still, the future is uncertain. For example, the tensed political situations, particularly the one with China, could be used as cover for the reintroduction of tariffs. The reason of the talks could be to gain leverage in disputes over technology, security, and economic influence.

On the subject of going back to comprehensive protectionism, experts warn that this would cause serious havoc in global supply chains and, consequently, the world economy as a whole. On the other hand, if a more balanced decision is made by policymakers, they might still resort to using tariffs selectively but at the same time they would be able to keep global trade routes open and strong.

It​‍​‌‍​‍‌​‍​‌‍​‍‌ could be that the tariffs during the Trump’s era have peaked due to the fact that the current US trade policy is quite diplomatic, is influenced by the economy and by the fact that the supply chain is getting back to normal. However, the business community and consumers alike are worried about the return of tariffs because of the complicated geopolitical situation that exists today.

The main question is still there: Are tariffs going to be used as weapons of strategy or will they simply be barriers? Time will tell whether this calm period marks a change towards more stable trade relations or ​‍​‌‍​‍‌​‍​‌‍​‍‌not.