The global economy faced an ‘earthquake’ on April 2, 2025, with the announcement of tariffs ranging from 10% to 50% being imposed by the U.S. on goods from 185 out of 195 world countries, including the EU, China, and India, but excluding Mexico and Canada. One week later, on April 9, Donald Trump announced a 90-day pause on the majority of tariffs to allow negotiations. However, a universal 10% baseline tariff remains in effect. The President’s move is likely to trigger an unprecedented transformation of U.S. trade. Economic experts warn that this decision could plunge the world economy not just into a recession, but even a crisis. How will President Trump’s tariffs affect global trade and the economy, and what will be the impact on U.S. businesses? Check some expert opinions in the article below.
Key Takeaways:
- One week after announcing tariff increases, U.S. President Donald Trump paused the tariffs for 90 days and reduced duties to 10%. However, he also kept in place and increased the tariffs on China to 145%. In response, Beijing increased customs duties on American goods from 84% to 125%.
- According to experts, high tariffs under the Trump administration have disrupted global supply chains, creating cost disadvantages and operational inefficiencies, isolating the U.S. from vital global markets, hurting American consumers the most, and destabilizing world markets.
- Tariff-driven price hikes on essential goods will deepen consumption reductions with households most likely turning to lower-quality substitutes or cutting spending altogether, accelerating social inequality and threatening broader societal stability.
- This disruption has slowed globalization, pushing countries toward regional trade blocs like ASEAN and BRICS, which offer more policy stability and trade predictability, making them more attractive to global suppliers.
DevelopmentAid: How do you think President Trump’s tariffs will impact the competitiveness of U.S. businesses globally?
“High tariffs under the Trump administration have disrupted global supply chains, putting U.S. firms at a clear disadvantage. These supply chains take years to develop, relying on complex networks of upstream and downstream partners, industrial capabilities, infrastructure, and skilled labor. Restructuring them in response to tariffs will be neither simple nor swift. U.S. companies seeking alternative sourcing in lower-tariff regions face friction in negotiations and long timelines to rebuild supplier capacity. This creates cost disadvantages and operational inefficiencies. At the same time, U.S. tech and digital service providers face growing skepticism from international partners due to policy unpredictability. This uncertainty is prompting businesses to diversify away from U.S.-centric platforms, digital infrastructure, and ecosystems. Over time, we are likely to see sellers and buyers shift towards more stable trade environments, particularly in regions like the EU and Southeast Asia, where policy and regulatory frameworks offer greater consistency. The broader consequence is an erosion of U.S. competitiveness –not only in pricing, but in the perceived reliability and strategic fit within global trade networks. Rebuilding trust and supply capacity will take significant time and investment.”
“The United States has introduced a new trade framework to secure advantages in bilateral relationships, but the outcomes remain uncertain. While tariffs may protect domestic industries, they also risk reducing demand, leading to job losses and inflationary pressures. The focus should not rest solely on price hikes. Tariffs often contribute to inflation while job and income losses reduce consumer spending. This combination – rising costs with falling demand – poses systemic challenges, particularly for vulnerable groups like retirees. It threatens not just short-term stability, but long-term economic growth and prosperity. Although referred to as a “trade war,” this is not a military conflict. Yet it forces exporting countries to redirect their goods elsewhere, an expensive and complex shift especially for smaller economies.”
“President Trump’s aggressive tariff agenda risks isolating the U.S. from vital global markets, hurting American consumers most and destabilizing world markets. Imposing steep tariffs on major partners such as the EU, Canada, and Mexico is weakening the West and pushing China ever closer to Russia which will not only provoke tariff retaliation but also undermine global security in an already fragile state after three years of Russian war of aggression. Such a global trade war was the last thing the world economy needed, particularly in innovation-driven sectors, such as technology and advanced manufacturing, that rely on open markets. In regions like Europe and Southeast Asia, this could result in American companies losing market share to more agile, tariff-free competitors.”
DevelopmentAid: What long-term economic challenges triggered by these tariffs do you foresee for American consumers, particularly those in lower-income brackets, and how can policymakers mitigate these effects?
“Tariffs act as a hidden tax on consumers, hitting lower-income households the hardest. Already burdened by unaffordable housing, job insecurity, immigration challenges, and limited access to healthcare, these communities are least equipped to absorb rising costs. Tariff-driven price hikes on essential goods deepen consumption downgrades, with households turning to lower-quality substitutes or cutting spending altogether. This trend will accelerate social inequality and threaten broader societal stability. As economic pressure mounts, political dissatisfaction is likely to grow. Social unrest may intensify, particularly if these hardships are perceived as the result of policy failure or neglect. To mitigate these risks, policymakers must urgently identify alternative supply chains through regional trade partnerships or selective domestic production to stabilize consumer prices. However, as mentioned earlier, reshoring production is constrained by the realities of global supply chain interdependence and capacity limitations. Equally critical is addressing structural inequality through strengthened social safety nets. Expanding access to healthcare, education, and affordable housing is essential not only for individual well-being but also for sustaining a stable and resilient consumer base which is the core engine of the U.S. economy. Without targeted interventions, both social cohesion and long-term economic growth remain at risk.”
“Trump-era tariffs, along with the retaliatory measures from China and the EU, will have a deep impact on U.S. firms. Domestic businesses face higher costs for imported raw materials and supply chain disruptions which will delay production. Meanwhile, American companies manufacturing abroad to benefit from cheaper labor now face elevated costs when reimporting goods into the U.S.. Retaliatory tariffs have also made U.S. products less competitive globally. Policymakers understand these risks but continue using trade tools to pursue strategic gains. The U.S. increasingly relies on AI and data to identify global market opportunities yet smaller nations struggle under this model, especially when local demand does not align with U.S. exports. For them, the “Buy American” policy remains impractical and economically limiting.”
“For American consumers, especially those in lower-income brackets, these tariffs will translate into higher prices for everyday goods. Inflationary pressure caused by import costs disproportionately impacts the most vulnerable. Policymakers must respond with targeted support measures such as tax relief, while also re-engaging in multilateral trade negotiations to restore confidence, especially the trade frameworks such as the EU’s FTA (Foreign Trade Agreement – editor’s note) with Mercosur (economic bloc of Argentina, Brazil, Paraguay, and Uruguay), and the FTA with ASEAN (Association of Southeast Asian Nations), Australia, and the Gulf Cooperation Council. It is now up to the EU to defend the global trade system established after WWII with GATT and enshrined by the WTO since 1995. The EU now has to offer FTAs to all the Free World from India to the African Union during this mandate. It would help to enlarge the WTO and the OECD in a quicker way as well. But Europe cannot save the global economic order alone. We need America back in the real world.”
DevelopmentAid: With countries like Japan, the European Union, and China retaliating against U.S. tariffs, how do you see the future of U.S. international trade relations evolving?
“The Trump-era tariffs have accelerated a decoupling of the U.S. from the global trade system, whether by design or consequence. This disruption has weakened the momentum of globalization and driven countries towards more regionalized trade blocs, such as ASEAN and BRICS, which offer greater policy stability and trade predictability. As a result, these regions are becoming increasingly attractive to global suppliers and partners. Many countries now view the U.S. as a less reliable trading partner. Even if future administrations reverse tariff policies, the erosion of trust has already shifted perceptions. For many, the U.S. will become a secondary market – important, but not central. Risk diversification will drive future trade strategy. In parallel, there is growing interest in reducing global dependence on the U.S. dollar. While any move toward de-dollarization will take time, its pace will hinge heavily on the trajectory of U.S.–China trade relations and broader geopolitical dynamics. This moment marks a decline in U.S. trade leadership. Rebuilding credibility will require a long-term commitment to multilateral cooperation, stable trade policy, and alignment with emerging global priorities.”
“The future of the U.S. economy now depends on a shift back towards diplomacy and open cooperation. Retaliation from global partners is already eroding trust and creating instability in global supply chains. A rules-based international trade system is crucial for sustainable economic growth, for the U.S. and the world. These tariffs are toxic and mad, they must be rescinded now. Free Trade is Peace. The EU needs a full Free Trade Agreement with the U.S. now. Trade wars only enrich the enemies of the West. Let us unite our markets and prosper together. This is not just a strategic imperative – it is a moral and economic necessity.”
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