Trump had said 'you may feel pain': How will the world be affected by the trade war started by the US?

Compiled by: Suat TEKİN - 12punto.com.tr

The US's additional customs duties on Canada, Mexico, and China were met with retaliatory taxes and measures from all three countries. Meanwhile, China announced that it would soon disclose its roadmap against the policies of US President Donald Trump. Following these developments, Trump made a statement indicating that Americans might feel 'pain.' Global markets began to show signs of 'anxiety' in the wake of these events. Declines of up to 2 percent were observed in Asian stock markets and US government bonds.

Global markets panicked as the US implemented its customs duty decisions. Stock markets began pricing in the decline in US growth data and the 'possibility of high inflation.'

Following this development, Trump issued a statement informing Americans that they might feel 'pain' due to inflation. In his remarks to the press, the US President emphasized that the potential economic hardships would be 'short-term,' using the following expression:

'(Countries in the world) owe us a lot of money and I am sure they will pay... I do not expect anything dramatic.'

According to a report by Reuters, economists estimated that Trump's decision would slow down global growth. With this decision, the Republican President has imposed customs duties on the US's three largest trading partners.

Trump noted that he would meet on Monday with the leaders of Canada and Mexico, who announced retaliatory customs duties against the US.

According to Trump, the trade war will help the US achieve not only its economic but also its 'political goals.' Previously, Trump had stated that he wanted to incorporate Canada, Greenland, and the Panama Canal into US territory.

HOW WILL THE WORLD BE AFFECTED BY THE TRADE WAR?

Emphasizing that customs duties would 'definitely' be applied to the European Union (EU), Trump did not share information on when this decision would be implemented. Following all these developments, US government bonds lost more than 2 percent of their value. Additionally, declines were observed in stock markets across Asia, particularly in Hong Kong, Seoul, and Tokyo.

According to ING Bank analysts, Trump's tariff decisions cover nearly half of US imports. On the first day of the week, the reaction of financial markets to the developments was notable. At the same time, the Chinese yuan, Canadian dollar, and Mexican peso lost value against the rising US dollar.

States in the US with strong trade ties to Canada and Mexico began to question Trump's decisions following these events. In states such as Texas, Minnesota, Utah, and Colorado, Republican politicians, as well as Democrats, demanded that the additional tariff decisions be reviewed.

In 'brief statements' to the press, Trump announced that he would not change his decision. The US President argued that despite the hardships to be endured in the short term, Americans would emerge profitable from the additional tariff applications in the 'long term.'

'The US was importing raw materials, especially oil and rare earth elements, from China, Canada, and Mexico. The imposition of additional tariffs on the US by these countries in retaliation against Trump could cause the American economy to enter a serious inflationary spiral.' Source: The Economist

News Source: 12punto