[Korea View] The Impact of Trump’s Tariff Policy on the Economy

The Impact of Trump’s Tariff Policy on the Economy

Analyzing the Background of Tariff Imposition and Its Effects on the Global Economy

사진: Unsplash 의 Joseph Chan

1. Trump’s Tariff Policy and the Global Economy

Recently, former U.S. President Donald Trump’s move to impose tariffs on multiple countries—such as China, Canada, and Mexico—has come under renewed scrutiny. Far from being a mere trade measure, this policy has sent shock waves through the global economy and has implications for both businesses and consumers.

In this article, we will examine how Trump’s tariff policy is currently affecting the world and explore, using concrete data, its potential long-term impact on economic trends.

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2. Recent Developments: Trump’s Tariff Imposition

2.1. Legal Basis for Tariff Imposition: The International Emergency Economic Powers Act (IEEPA)

According to various reports, Trump signed an executive order to impose high tariffs on Canada, Mexico, and China immediately after regaining office in 2025 (referred to by some as the start of his “second administration”).

These new measures were enacted under the International Emergency Economic Powers Act (IEEPA). IEEPA grants the president the authority to unilaterally implement stringent economic actions—such as tariffs and the suspension of financial or trade transactions—in times of national security threats or emergencies.

2.2. Specific Tariff Rates

• 25% Tariff on Canadian/Mexican Steel, Aluminum, and General Imports
  • However, Canadian crude oil and other energy products are subject to a 10% tariff, presumably to mitigate the impact on domestic U.S. energy prices and inflation.
• An Additional 10% Tariff on Chinese Imports
  • Under the first Trump administration, some Chinese goods were already subject to tariffs of 10–25%. This new order raises tariffs on certain products by an extra 10%, increasing them above previous levels.

2.3. Rationale Behind the Tariff Imposition

The Trump administration cites reasons such as illegal immigration across the Mexico–Canada borders and the influx of Chinese-origin fentanyl into the U.S., which they argue poses severe harm to American society. By invoking IEEPA, the administration insists this hard-line measure is aimed at protecting U.S. citizens and strengthening domestic industries.

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사진: Unsplash 의 CHUTTERSNAP

3. Key Issues and Challenges

3.1. Escalating Trade Tensions

Canada and Mexico have both announced that they are considering retaliatory tariffs. Notably, Canadian Prime Minister Justin Trudeau has signaled “robust countermeasures,” and several Canadian provincial governments have likewise pledged to “push back.”
China, having gone through a trade war with the Trump administration in its first term, is reportedly examining the possibility of reintroducing retaliatory tariffs as well.

3.2. Consumer Price Inflation

Canada, Mexico, and China rank among the United States’ top trading partners, collectively accounting for around half of all U.S. imports. High tariffs could significantly increase the cost of imported goods such as automobiles, electronics, and construction materials—rising costs that would ultimately be passed on to American consumers in the form of higher prices (inflation).

According to a recent World Bank report, if the U.S. implements a blanket 10% tariff and other countries retaliate in kind, global economic growth could decline by about 0.3 percentage points.

3.3. Corporate Burden and Supply Chain Disruption

The new tariffs will likely deal a blow to companies (including South Korean firms) that export to the U.S. via factories in Mexico. Samsung Electronics, LG Electronics, and Kia Motors, for instance, ship finished products from their Mexican facilities to the U.S. market. High tariffs may force them to reorganize their supply chains.
Tariffs on Canadian aluminum and steel may also drive up costs for U.S. automotive and construction industries.

3.4. Potential Negative Effects on the U.S. Economy

While the administration claims these tariffs are intended to protect domestic industries in the short run, critics point out that rising raw materials and component costs could undermine U.S. manufacturing competitiveness. Alternatively, foreign governments’ retaliatory tariffs could hurt American farmers and exporters.
Multiple research bodies (such as the Peterson Institute for International Economics and the Congressional Budget Office) estimate that U.S. GDP could shrink by hundreds of billions of dollars over the next few years if these tariffs remain in place.

 

사진: Unsplash 의 Charles Forerunner

4. Possible Solutions and Key Implications

Multilateral Negotiations & Restoring the WTO Framework

If bilateral retaliation continues as it does now, there is a risk that trade wars will spiral out of control.
Resolving disputes through the World Trade Organization (WTO), as well as mitigating tensions via dialogue between countries, has become increasingly important.

Balancing Protectionism and Free Trade

While safeguarding domestic industries and national security is vital, excessive tariff policies can disrupt global supply chains and eventually burden domestic consumers.
Addressing national security concerns such as illegal immigration and narcotics is crucial, but policies should be carefully designed so that the fallout from any trade sanctions is minimized.

Trade Diversification and Supply Chain Distribution

Nations overly dependent on a single country or region need to broaden their trade relations and forge FTAs or economic partnerships with more diverse partners.
Companies, for their part, can mitigate tariff risks by dispersing parts procurement and production bases across multiple locations.

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5. Future Outlook and Our Response

Trump’s tariff policy may offer short-term protection to select domestic industries, yet it also carries the likelihood of negatively impacting the global economy in the longer run. Should trade wars with key partners such as Canada, Mexico, and China escalate, both consumers and businesses are bound to suffer.

Canada and Mexico have already announced tough responses, signaling intensified trade frictions within North America. China, for its part, may revive the sorts of retaliatory tariffs and regulatory measures against U.S. firms that it employed during the first Trump-era trade war. The European Union (EU) is also pushing back against the possibility of Trump’s “blanket tariffs,” hinting at further disputes to come.
Moreover, there are concerns that countries like South Korea, which run sizable trade surpluses with the U.S., may end up becoming “next in line.”

So how should we respond? Governments must pursue more balanced trade policies and diplomatic efforts, while companies and consumers should reevaluate their supply chains and market strategies in light of the changing economic environment. We will need to closely monitor any shifts in future tariff policies and their broader effects on the global economy.

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6. References and Articles

• “Trump on Imposing Tariffs: ‘Necessary to Protect American Citizens…This Is My Duty,’” Link
• “Trump to Impose 25% Tariff; Canada Signals Stern Response,” Link
• “Trump: ‘Tariffs Are to Stop Illegal Immigration, Drugs,’” Link
• “U.S. Officially Notifies Canada of Tariffs… ‘Effective From the 4th,’” Link
• “Trump Slaps Blanket Tariffs on Canada, Mexico, and China—Trade War Enters Rough Waters,” Link
• “[Breaking] Trump to Levy Tariffs on Canada, Mexico, China from the 4th—‘More If They Retaliate,’” Link
• “Trump: ‘Must Protect Citizens from Fentanyl Danger’—Explains Reason for Canadian Tariffs,” Link
• “Trump to Impose Tariffs on Canada, Mexico, China Starting on the 4th—Foreign Media: ‘Korea and Taiwan Could Be Next,’” Link
• “In the Face of Trump’s 25% Tariff Bomb, Canada Says ‘We’re Ready,’ Teams Up with Mexico,” Link
• “[Breaking] Mexican President Declares ‘Counter-Tariff on the U.S.,’ Clashing with Trump,” Link
• “U.S. Imposes 25% Comprehensive Tariff on Canada, Mexico…and 10% on China,” Link
• “Trump to Tariff Canada, Mexico, China from the 4th—Threatens Higher Rates If Retaliated,” Link
• “‘Tariff Bomb’ from Trump… Another Blow to Samsung & Asian Firms,” Link
• “Peterson Institute for Intl. Economics: ‘If US Imposes Tariffs on North America, GDP Could Drop by $200 Billion Over Several Years,’” (Summary of article discussion)
• “Trump to Tariff Canada, Mexico, China from the 4th—Foreign Media Warn of Threat to Other Trade-Surplus Countries Like Korea,” Link

트럼프, 4일부터 캐·멕·중 관세…외신 “대미 무역흑자국 韓 타격 전망”

 

#Trump #TariffPolicy #IEEPA #UnitedStates #China #Canada #Mexico
#TradeWar #Protectionism #GlobalEconomy #ConsumerPrices #Fentanyl
#TradeTensions #BusinessCosts #SupplyChain #WTO #FreeTrade
#EconomicNews #EconomicPolicy #InternationalPolitics

 

This article was prepared with the assistance of AI. The referenced news reports and research data are based on various media outlets and official publications.