Breathe
By Pia Taracena Gout
Donald Trump's tariff strategy set the whole world spinning. The list of taxed and aggrieved countries is interesting, especially because of the unbelievable way of taxing. The memes about the tariffs on the penguin islands were not long in coming. As well as the incredible response of the U.S. Secretary of Commerce, Lutnick, who responded to the question: Why tax an island with penguins? "To prevent countries from using other countries to turn the measure around", he said.
One country that surprised and was surprised was Lesotho, an African country, who took the "prize" of 50% tariffs. The reason apparently is that Lesotho produces the fabric for the jeans of famous American brands. The tariffs would mean the closure of 11 factories and job losses. Trade between the two countries is in deficit for the United States, which should not be happy about Lesotho's relationship with China, which has been strengthened since September 2024. The relationship between the two countries seeks to increase investment opportunities in infrastructure, for example. Other affected African countries, such as Angola (32%), South Africa (30%) or Madagascar (47%), lead us to ask whether the situation will be enough to propose an African free trade zone or to look to Asian countries, what is certain is that China can take better advantage of the situation.
What does Trump want, we see three important objectives, the first one, to overcome through tariffs the deficit that the United States has, which is 1.2 trillion dollars (in English) but at the same time, he has the objective, the second one, to sit down to negotiate the parties. Apparently 50 countries have already sought to sit down at the negotiating table (so said the President). This situation also makes it clear that the countries that have the greatest capacity to face Trump's tariffs are the ones that threaten the most with retaliation: China, the European Union or Canada, for example. Those that have less capacity, seek not to confront, such as Mexico, or sit down to negotiate in an easier way. The third is that the aim is to reindustrialize the United States, seeking to attract companies to manufacture in that country.
The European Union has proposed zero-for-zero tariffs on industrial goods to the US. If the proposal does not work, they will continue to consider all the instruments at their disposal to apply pressure, such as an import surveillance task force, an instrument of economic coercion and market diversification. In addition, that their important products for U.S. consumption such as wine or cosmetics will go up in price in the United States.
And we always come back to China, which is these days, is the country that has put more tariffs in retaliation to the United States, the latest are 34%. To which Trump immediately responded by threatening that if not removed, today April 9 the US could put 50% more tariffs on China. U.S. tariffs on China have already reached 104%.
For many, Trump's new trade policy definitely changes the rules of the global trade game, which has already had even social repercussions. The fall of the stock markets in Asia, in the United States itself and in Europe, reflect negative reactions from the markets, which the president has minimized by saying that sometimes you have to take a very hard medicine to get ahead, so that in the future Americans will be happier and richer. Don't be stupid, he told them.
Meanwhile, the world revolves around threats such as high inflation, the looming recession, by the way, also in the United States. The consequences are being felt in industries such as tourism, especially in Europe. According to Accor Group S.A., advance bookings for the summer from Europe to the U.S. are down 25%. Trump's medicine affects all sectors.
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