While Donald Trump has modeled his policies on those imposed by the former US president William McKinley (1843-1901), whom he lauds as the "king of tariffs" for imposing 50% tariffs, he has ignored the fact that today's global economy is completely different from that at the end of the 19thcentury. At that time, trade accounted for 10% of the global GDP as opposed to 25% today. Supply chains now span the entire planet and no longer revolve around the Rust Belt in the northeastern US as they did a century ago.
Donald Trump's tariff protectionism is therefore an unprecedented shock; the consequences of which are difficult to gauge, particularly as reciprocal tariffs considered by the American president will put an end to a system built at the end of the Second World War that, precisely to avoid geopolitical tensions, was based on non-discrimination with all countries being tariffed equally.
What will tomorrow's global trade landscape look like? On February 18, Mario Draghi, the former head of the European Central Bank, cited two dangers: "Higher US tariffs on Chinese products will redirect Chinese overcapacity towards Europe, further hitting European firms," he said. Indeed, larger EU companies are more concerned about this effect than loss of access to the US market."
China's exports are growing at three times the rate of world trade and propelling its trade surplus to record heights. It has overtaken its GDP threshold of 10% in 2024 and is approaching the record figure of 12% which it had reached before the 2008 financial crisis. It is a tsunami that has already damaged German industry, which is losing its market share in the automotive, cleantech and civil aviation sectors and according to a study by the think-tank Centre for European Reform, published in mid-January, "China’s macroeconomic imbalances now directly infringe on German industrial interests."
Investment announcements
And the trend is likely to speed up. Several Chinese manufacturers, who were interviewed by Reuters, are preparing to reduce their profit margins and embark on "a rush" to conquer other markets to compensate for their falling sales in the US.
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