US President Donald Trump has announced a partial launch of his customs plans, but the first signs of malicious retardation in global trade have already begun to emerge. Companies around the world interrupted requests while Trump intensifies his trade war with China.
On Wednesday, Trump said he will increase prices on Chinese products to 125%while introducing a 90 -day break in plans to raise fees for dozens of other economies, which will face a fixed interest rate of 10%. On the same day, China had announced new US import rates, which increased the interest rate to 84%. Climbing brings together the world’s two largest economies in a relaxation process, with bilateral exports that are subject to insurmountable tariffs by many economists.
Although Trump’s action has been well received by the financial markets, there were already signs that their tariffs destabilize the global economy and that the virtual stop for trade between us and China is beginning to have negative consequences. In practice, Trump extends the uncertainty that has affected the feeling of companies and consumers.
“Abrupt movements in tariffs between countries do not help to reduce the already uncertainty level of trade policy,” wrote economists Rana Sajedi, Maeva Cousin and Tom Orlik from Bloomberg Economics. “Trump seems to consider uncertainty as an advantage in the negotiations. For companies and markets it is a weight.”
According to economists, Even with temporary weapons care, the US average degree rose to 24%, an increase of almost 22 percentage points Since the beginning of Trump’s second term. Impact on growth and inflation remains in a “shock that will develop over two to three years.”
Amazon began to cancel requests from China and other parts of Asia, Bloomberg said. HAA’s automation, the largest machine tool manufacturer in the West, reduced production and interrupted overtime from 1,700 workers in its northern factory in Los Angeles, with reference to a “dramatic decline in demand from domestic and foreign customers.”
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The measures reflect a broader break on requests, which already reach global delivery chains when Trump’s customs come into force.
Vizion Inc., a data company for the supply chain, estimates that global container reserves between April 8, fell 49%, while US imports withdrew 64% compared to the previous week. China reserves fell 36% during the same period. Globally, the retreat was 48% week to week.
“The approach to” wait to see “spread to millions of scheduled transport each month”said Kyle Henderson, CEO of Vizion.
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Jake Colvin, chairman of the National Foreign Trade Council in Washington, said that even if Trump’s break is welcome, the base level of 10% and huge prices about China will continue to press trade. “This temporary interruption can relieve immediate pain, but it does not reduce the uncertainty that paralyzes the companies’ companies, supply and investment decisions,” he said.
David Warrick, former responsible for Microsoft’s global supply chain, today at Overhaul, a logistical risk management company, said that the best strategy for many companies is “running to wait.”
“Making a strategic decision does not look like a good idea because everything is changing very quickly,” Warrick said.
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According to him, transport between us and China should fall considerably in the coming weeks, following a new increase in demand for air transport to predict customs application. In the medium term, the highest costs should reduce US demand for Chinese products and vice versa-causing retardation in transport through the transpecific route.
Negative shock
Robert Koopman, former WOC manager and professor at American University, said that global trade should slow down in the coming months with the adoption of customs.
The first months of the year were “very positive” due to expectation of exports to escape customs. “But I think that in the next four or five months it will be expressive slowdown,” he said. “The biggest negative shock” will be between us and China, with tariffs that make trade impossible for products without alternatives.
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Koopman sees as better hope for global trade stimuli in China and Germany and a strong industrial offensive from the European Union, which can soften the effects of US customs and maintain trading flow outside the US-China relationship. A total break in trade between the two countries would affect both economies, but almost $ 700 billion in bilateral exchanges last year represented less than 3% of global trade, he noted.
WTO, which will soon reveal new forecasts, Warned that customs climbing could lead to a contraction of about 1% in volume of global trade of goods this year – cut off four percentage points in relation to previous estimate.
In a report entitled “90 -day breaks in customs, is not as useful as it seems,” Citigroup warned that the effective US customs are about 21 percentage points over the January level.
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“With a 60% increase in promotional rates, much of the United States and China were already antiomonomic – imagine with an increase in over double,” said Robert Sockin, senior economist at Citigroup.
Impact on small businesses
For many small US importers, customs represent a matter of survival.
Ben Knepler, owner of Pennsylvania True Places, which manufactures recreational chairs that were sold for up to $ 150, asked Cambodia suppliers to cancel transport until the customs degree. “It doesn’t make sense to conclude if we cannot import the product,” he said. “There is still a lot of uncertainty.”
Although he hopes to resume production, the decision is still involved in doubt. The most important thing: if Trump will apply, after 90 days, the 49% interest rate was announced on April 2 on Cambodia products or maintain a base rate of 10% during the break.
“This new customs round is existential for us,” Knepler said.
Companies that try to adapt to customs have used various strategies, including the use of artificial intelligence.
Fred Laluyaux, CEO and Co -Founder of Aera technology – which serves Unilever, Dell and Kraft Heinz – says that one of the most important answers to the highest costs is to use to reduce purchasing costs. But there are boundaries, especially for those who have not prepared for an announced crisis.
“If you went to any delivery chain conference over the past 15 years, you have heard that you have to diversify, avoid depending on a single source,” Laluyaux said. “AI can help redirect routes. But if at the end of the day the price is 100%, there is nothing to do.”
The best hope for companies that depend on trade in USA-China can be an agreement between the two countries. In a statement in the White House, Trump said he expects an understanding with Beijing. “I think we will do a very good deal for both of them,” he said. “President XI is one of the smartest people in the world.”
But at the moment, there is no immediate way out for the trade war, according to Wendong Zhang, an economist at Cornell University.
“Even knowing that it will be more about a higher economic cost, China should maintain its position for strategic and geopolitical reasons,” Zhang said.
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