Who won or lost in Trump's tariff war?

Accounting for close to 30 per cent of the global consumer spending, the USA has been the favoured export destination of the rest of the world. The incumbent US president, Donald Trump, thinks it's unfair. Since, in his view, exporting countries are selling more to America than they are buying. So, they should pay the price and hence the tariff war. 

But President Trump threatened all, regardless of their being allies or adversaries, with the weapon of tariff. Now, the question is, why is it that the US president has the power to declare a tariff war against all of its trading partners, big and small, and not the other way around? The answer is the post-World War II (WW II) realities that helped the USA to assume its unique position. In fact, with the destruction of the European economies following the great war, the biggest and the strongest economy that emerged on the global stage was the USA. Naturally, it took the leading role, especially in the reconstruction of the war-devastated Europe and Japan. As a result, it played the key role in establishing and shaping the post-WWII global economic order and was instrumental in establishing the global financial institutions, the World Bank (WB) and the International Monetary Fund (IMF). The WB looks after long-term economic development and poverty alleviation in the developing countries with loans and grants, while the IMF stresses global financial stability through helping countries address their balance of payments issues and manage economic crises.  The US controls both the institutions. Through introducing the Bretton Woods system in 1944 to regulate currency exchange rates and promote global trade, it pegged the currencies of the Bretton Woods parties to the US dollar (USD), while USD was pegged to gold at a fixed rate of USD35 per ounce. But in 1971, the US government ended the  USD's convertibility to gold, thereby putting an end to the Bretton Woods system.  

Has by now the USD's status as the  world's reserve currency for over the last seven decades been challenged by any alternative system? Is intergovernmental body of the world's fast growing economies -- Brazil, Russia, India, China and South Africa (BRICS) -- a threat to US's dominance in global economy and trade?  Though US is still the world's largest economy, it is clearly wary of its declining trend. But how to reverse it? President Trump's formula to achieve it is by starting from scratch and turning America again into a net producer, not a net consumer. But the US is no more the pre-WWII economy. It is already a completely financialized one. But Trump wants to reindustrialize America.  Therefore,  it is a last-ditch attempt by Trump to turn the tide.

The US's position is now being challenged by China as a the rising  (perhaps, it is already the biggest world economy) economic superpower. And China has been selling more of its industrial goods in the US market than the latter is buying. Complaining that US is being unfairly treated, president Trump during his presidential election campaign in 2016, vowed to take a tough stance against China as well as its other international trading partners once in office.  His argument was, due to, what he claimed to be unfair business transactions with its trading partners, America's blue collar workers are losing jobs.  So, he imposed tariffs on Chinese solar panels and washing machines, Later, the Trump administration slapped 25 per cent tariff on imported steel and 10 per cent on imported aluminum. After taking office for the second time in 2025, he imposed 10 per cent blanket tariff on all imports from China. China also retaliated by levying 25 per cent tariff on imports of some 94 different food and agricultural products from the USA. 

However, the notion of punishing one's business rival with tariff is basically a flawed one. For instance, China levied a 25 per cent tariff on US soybean, of which it is a big buyer and switched to Brazil as an alternative source. The US had to pay the price by spending billions of dollars to protect its soybean farmers. But China, too, could not gain much by importing Brazil's soybean, since the price of Brazilian soybean meanwhile increased in response to increase in its demand.

Now, who won after president Trump's global tariff war that it declared in the beginning of April last? No doubt, Trump's declaration sent the world reeling from panic. The reason for the panic was unpredictability of what might come finally. For governments and businesses worldwide plan their investments, set export and import targets, strategise expansion, create jobs  and so on based on what is given and what decisions other major world economies are going to make. The US being the world's largest economy, its decisions matter.  But president Trump became the source of indecision on a global scale. However, the state of uncertainty that caused the panic is now over.  For the tariff deals that the US has struck with some of its allies or the punitive ones it has levied on others, are already known. So, they can now plan their next move. Even to its traditional European allies, Japan, South Korea, Canada, Australia, New Zealand, etc., the US is no more a dependable partner. The UK, for instance, got a blanket 10 per cent on about all its export to the US. Though initially shocked, it (the UK) later found that the EU and Japan got 15 per cent. Evidently, in the case of the allies, the size of the tariff was determined by the amount of the trade deficit. The US's deficit with EU was USD240 billion, while with Japan it was USD70 billion last year. At this point, one might also term Trump's tariff war as a war against trade deficit. And it does not just end with tariff  -- you have to buy US products, invest in America and all such conditions. Japan, to save its car export to the US, had to promise that it would invest to the tune of USD500 billion in the US economy. Bangladesh, too, will buy plane, wheat, cotton, soybean, etc., in exchange for reciprocal 20  per cent tariff (plus the average 15 per cent or so it was already paying) imposed on it to get access to the US market for its products. 

Essentially, the US is cannibalizing its partners.  So, they will be looking for fresh alliances. 

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