President Donald Trump’s tariff policies are beginning to drag significantly on the global economy, disrupting decades of relatively free and stable international trade. From large multinationals to smaller e-commerce businesses, companies are reporting lowered sales targets, planning job cuts, and rethinking business strategies. The uncertainty surrounding where these tariffs will lead is proving to be a major economic burden in itself, as global markets struggle to respond to unpredictable policy shifts.
Tariffs already in place—such as 10% blanket levies and targeted surcharges on steel, aluminum, and autos—are creating ripple effects across major economies. While negotiations with China continue and potential deals with countries like India, Japan, and South Korea offer some hope, the escalating back-and-forth tariffs (some reaching up to 145%) are prompting companies like Electrolux, Volvo, Logitech, and Diageo to abandon projections amid volatile conditions.
Smaller businesses are particularly vulnerable, especially after the U.S. eliminated duty-free treatment for Chinese e-commerce shipments under $800. Many are now exiting the market due to unmanageable costs. This rising trade tension has led central banks, such as Japan’s, to lower growth forecasts. Economies across Europe and the MENA region are also revising their outlooks downward as key indicators like purchasing manager surveys reflect sharp declines in factory activity.
While some countries, like India, may benefit in the short term from production shifts and relatively lower tariffs, the broader impact is a demand shock that raises prices for U.S. consumers while suppressing international economic activity. This may reduce inflation pressure and open the door for interest rate cuts in some regions. Still, economists remain cautious, warning that any temporary boost from front-loaded exports could be followed by deeper slowdowns, especially if structural reforms in places like China or the eurozone do not materialize.
Source: Reuters