Trump Declares Global Trade War, Targets 185 Countries Including Pakistan
Agencies/News Desk
Islamabad: The latest round of US trade tariffs unveiled by President Donald Trump on Wednesday could deal a significant blow to the already fragile global economy.
The tariffs, which come on top of the ongoing post-pandemic inflation surge and record debt levels, raise fears of an impending global recession.
As the US imposes new levies across a wide range of imports, the ripple effects are expected to be felt far beyond US borders. “Trump’s tariffs carry the risk of destroying the global free trade order that the United States itself has spearheaded since World War II,” said Takahide Kiuchi, Executive Economist at Nomura Research Institute.
The tariffs, which include a 10 percent baseline tariff on all imports, as well as specific tariffs of up to 34 percent on China and 20 percent on the European Union, could escalate trade tensions, according to experts. Additionally, the recently confirmed 25 percent auto tariff is set to further destabilize international trade flows.
The new global levies bring the US tariff rate on imports to 22 percent, a level not seen since 1910, up from just 2.5 percent in 2024, said Olu Sonola, Head of US Economic Research at Fitch Ratings. “This is a game changer, not only for the US economy but for the global economy,” Sonola added. “Many countries will likely end up in a recession.”
While the International Monetary Fund (IMF) Managing Director Kristalina Georgieva has refrained from predicting a global recession for now, the IMF is expected to make a minor downward revision to its global growth forecast for 2025.
The tariffs’ impact is expected to vary widely across nations. Countries such as Britain will face tariffs as high as 10 percent, while Cambodia could see a staggering 49 percent tariff. If the tariffs trigger a broader trade war, China is likely to face further challenges, as it searches for new markets amidst weak domestic consumption.
“Asian economies will be hit harder than most by US reciprocal tariffs,” said Marcel Thieliant, Head of Asia-Pacific at Capital Economics. “Not only do these economies face higher tariffs, but they are also more dependent on US demand than many others.”
The ongoing trade disruptions could also undermine global supply chains that have historically helped keep prices in check, potentially leading to higher inflation rates than the 2 percent target currently embraced by central banks. This could put additional strain on economies, particularly in Japan, where the Bank of Japan may be forced to consider rate hikes even as other central banks are looking to cut rates.
The new tariffs also add another layer of complexity to the already strained relationships between the US and its allies. Japan and South Korea, both major auto exporters, were specifically singled out by Trump for unfair trade practices. While Japan has indicated it may challenge the tariffs at the World Trade Organization (WTO), the country faces limited options in pressuring the US given its close security ties.
Australian Prime Minister Scott Morrison criticized the tariffs as an unfriendly act, although he ruled out retaliatory measures. The tariffs come at a time when many governments are already struggling to manage the world’s record $318 trillion in debt while funding critical priorities such as defense, climate action, and welfare.
The tariffs also raise questions about their effectiveness in achieving Trump’s goal of boosting U.S. manufacturing. With labor shortages and near-full employment in the US, it remains uncertain whether the tariffs will successfully incentivize private sector investment in domestic production.
Some experts suggest that Trump may turn to other methods to address the US trade deficit, such as seeking a rebalancing of foreign exchange rates to benefit US exporters. “We could see him take more risky measures, potentially challenging the dollar’s dominance as the world’s reserve currency,” said Freya Beamish, Chief Economist at investment strategy firm TS Lombard.
Despite the challenges, European Central Bank President Christine Lagarde recently warned that Europe must act swiftly to accelerate economic reforms and adapt to a changing global landscape.
“We are no longer living in a world where the US is the unquestioned hegemon,” Lagarde said, reflecting on the challenges of navigating a fragmented and uncertain global economy.
As the world grapples with the fallout from the US tariffs, it remains to be seen whether the global economic order will be reshaped or if the repercussions will simply lead to another chapter in an increasingly uncertain future for international trade.
