The real beneficiary of Trump’s tariff war

On 2 April, President Donald Trump shocked global markets and alarmed international partners by imposing sweeping tariffs on nearly all imports into the United States — a severe escalation of protectionism unseen in nearly a century.

On 9 April, in an equally dramatic shift, he announced a 90-day pause, but the reprieve excluded China; tariffs on Chinese imports were instead raised further to a staggering 125 per cent! The markets — and arguably some trading partners as well — responded to the schizophrenic re-adjustment with relief.

But the escalation with China will have far-reaching repercussions that are not immediately manifest. What Trump and his economic advisors do not see — or are possibly ignoring in this game of desperate brinkmanship — is that far from securing America’s economic future, the tariff war threatens severe damage domestically, isolates the US internationally, accelerates China’s global rise, and ignites widespread consumer boycotts of American goods worldwide.

Domestically, the immediate effects of Trump’s tariff policy are already painfully evident. Tariffs are taxes charged on goods bought from other countries. Economists universally regard tariffs as hidden taxes, inevitably resulting in higher prices on everything from everyday essentials to premium electronics. Analysts predict astonishing price hikes, including Apple’s iPhone potentially skyrocketing to nearly $2,300.

At a time when inflation remains stubbornly high, these tariffs could add thousands of dollars annually to the expenses of the average American family, significantly eroding their purchasing power and quality of life. American businesses, particularly in manufacturing, face severe disruptions. Major automakers such as Stellantis have already announced layoffs and temporary plant closures in anticipation of soaring production costs and disrupted global supply chains.

Small businesses, heavily dependent on affordable imported components, face existential threats, undermining profitability and potentially triggering widespread job losses. Ironically, tariffs designed to protect American workers may end up harming them the most.

Retailers, meanwhile, are grappling with higher input costs, leading to inventory shortfalls, delayed shipments, and thinning profit margins. These cascading effects ripple across supply chains, further exacerbating the pressure on businesses that form the backbone of the US economy.

Internationally, Trump’s aggressive protectionism has provoked rapid and intense consumer backlash, as ‘Boycott USA’ campaigns surge globally. Trump’s own properties, including golf courses in Scotland and Ireland, are targeted by protests and booking cancellations.

Tesla, a symbol of American innovation, has seen dramatic sales declines in Europe, Australia and New Zealand due to coordinated boycotts. Canadian consumers have creatively resisted American imports using apps like Maple Scan, while Denmark’s largest retailer, Salling Group, distinctly labels European products, facilitating consumer boycotts of American imports.

Despite the complexities involved, these boycotts have already translated into real economic impact, weakening American companies’ positions in key international markets. The global consumer backlash underscores widespread dissatisfaction with Trump’s trade policies, adding economic and reputational costs that may linger long after tariffs are withdrawn.

Moreover, this wave of protest has extended beyond physical goods, impacting American streaming platforms, service providers and franchises, which are seeing declines in subscriptions and sales overseas. The long-term effect could be a realignment of global consumer loyalty away from American brands.

Financial markets have also responded with alarm. The Dow Jones Industrial Average suffered its worst single-day loss since 2020, plunging nearly 6 per cent, reflecting intense investor anxiety. The impact reverberated globally — Asian markets endured what analysts called a ‘bloodbath’, with India’s Sensex losing nearly 4,000 points at opening, erasing over Rs 14 lakh crore instantly.

The Shanghai Composite fell more than 6 per cent, and Hong Kong’s Hang Seng plunged around 10 per cent. Export-dependent economies like Vietnam and Bangladesh, facing devastating new US tariffs, risk severe economic setbacks, potentially pushing them toward recession.

Analysts worry these tremors could usher in a protracted period of instability, further complicating global recovery from recent economic shocks, including the pandemic and energy supply disruptions.

Ironically, Trump’s tariffs strengthen the very adversary he aims to challenge — China.

Chinese leadership has swiftly capitalised on America’s isolationist move, advocating open trade and positioning China as a stable alternative to erratic US policies. As traditional US allies face punitive tariffs from Washington, they increasingly look to China for economic stability and partnership. Trump’s tariff war fractures critical alliances that could collectively counter China’s economic ambitions, inadvertently accelerating China’s geopolitical ascent.

Already, Beijing has moved to deepen trade ties with affected countries, signing new bilateral agreements and strengthening regional partnerships through initiatives like the Regional Comprehensive Economic Partnership (RCEP) in the Asia-Pacific.

Historically, protectionism has rarely delivered promised prosperity. The infamous Smoot-Hawley Tariff Act of 1930 deepened the Great Depression, demonstrating clearly that trade wars produce no real winners, only varying degrees of losers. Today’s tariffs similarly threaten spiralling inflation, economic stagnation, significant job losses, and severe damage to international relationships.

The lessons from history are being ignored in favour of populist rhetoric, but the outcomes remain predictably grim: economic isolation, retaliatory tariffs and weakened global influence. America’s recent prosperity and global influence have long been anchored in innovation, open markets and robust international trade partnerships — principles severely compromised by Trump’s sweeping tariffs. The administration’s strategy overlooks the complexities of global supply chains, where American manufacturers depend heavily on imported components.

Simultaneously, emerging markets that once looked to the US as a trade partner may find more reliable and accommodating alternatives in China. Furthermore, Trump’s unilateral approach undermines decades of careful diplomatic work aimed at addressing unfair trade practices through multilateral institutions and coordinated international responses. Instead of fostering cooperation, this protectionist gamble alienates key partners, diminishes US diplomatic leverage, and hands strategic advantages to China.

American influence, once bolstered by a collaborative trade model and global rule-setting power, now faces erosion in favour of authoritarian economic systems. Trump’s tariff gamble jeopardises America’s economic stability and global leadership. Far from restoring domestic manufacturing or resilience, these policies create deep economic damage at home, provoke global consumer resistance, isolate America internationally and unintentionally empower China’s strategic ambitions.

Unless swiftly reversed, this reckless protectionism could hasten America’s decline, inadvertently paving the way for China’s dominance in the global economic order. The world is watching, and the stakes — for both the economy and the broader geopolitical balance — could not be higher.

Ashok Swain is a professor of peace and conflict research at Uppsala University, Sweden