English translation of an article by Prof. Dr. Mehmet Karaçuka, originally published in Seferihisar Yeni Haber on 4 April 2025 under the Turkish title “Küreselleşmenin sonu mu? Trump tarifeleri ve etkileri.”
Following Trump’s announcement on Wednesday of a 10% tariff on almost all imports into the United States beginning on April 5, and ‘reciprocal’ tariffs of up to 50% on dozens of countries beginning on April 9, global financial markets were hit by what looked like a tsunami. Stock indices in the United States, Asia and Europe recorded some of their steepest declines since the start of the pandemic.
The increase in tariffs on China was especially striking. Following the addition of another 34 percentage points by the US president to existing measures, the tariffs imposed on Chinese exports could exceed 60%.
Throughout history, customs duties have been imposed by countries on imports and, in some periods, exports for various reasons. Initially, their principal purpose was to generate revenue for governments and monarchies. As industrialization spread, however, tariffs increasingly became a protectionist instrument, particularly for late-industrializing countries seeking to strengthen domestic industries.
Until the final decades of the twentieth century, another central objective was to reduce balance-of-payments deficits and alleviate shortages of foreign exchange.
With globalization gaining momentum during the last quarter of the twentieth century, however, international trade underwent a wave of liberalization. Institutions such as the World Trade Organization (WTO) received broad mandates to reduce arbitrary tariffs and non-tariff trade barriers. This process had often been regarded as irreversible, which helps explain the enormous international reaction to Trump’s decision to increase tariffs.
Trump’s stated primary objective is, of course, to strengthen the American economy. His campaign slogan, ‘America First,’ captures the priority he assigns to US interests in global affairs. Through these measures, he seeks to reverse trade concessions he believes the United States has extended to its European ‘allies’ and Asian ‘competitors.’ But his objectives go further.
The European Union and China, two of America’s leading economic competitors, rely heavily on exports for economic growth, and the United States is among their most important markets. Trump aims to undermine this advantage through tariffs, particularly because the United States runs large trade deficits with both the EU and China.
The more important question, however, concerns the economic effects of these measures on the United States and the rest of the world. I discussed the broader consequences of tariffs on iron and steel industries in an earlier column. Much of that reasoning also applies here. Above all, these tariffs restrict trade. Both Europe and China have announced that they will respond with retaliatory measures.
A tariff war of this kind would therefore become a substantial obstacle to global economic growth, including growth in the United States itself. This concern explains much of the sharp decline in stock markets. Tariffs also raise domestic prices and create inflationary pressures, potentially putting additional stress on financial markets.
Moreover, the rationale for tariffs of this scale is particularly questionable in a world whose economies are so deeply integrated. Trump also wants high tariffs to encourage manufacturers to move production to the United States. Yet because production processes have become thoroughly global, this expectation may prove unrealistic.
For example, Stellantis announced that it would place 900 workers at five US facilities on unpaid leave following temporary production stoppages in Canada and Mexico, where its operations were affected by Trump’s separate 25% tariffs on imported automobiles.
Reversing highly integrated global production systems at this stage would be extremely costly. It is quite possible that the United States itself would ultimately bear the greatest share of the damage.
Original publication: Seferihisar Yeni Haber — Küreselleşmenin sonu mu? Trump tarifeleri ve etkileri (4 April 2025).
