In a dramatic return to his signature “America First” trade policies, President Donald Trump has threatened to impose new tariffs on imports from China and the European Union, sending shockwaves through global markets and sparking fears of an escalating trade war.
Trump Targets China with 10% Tariff Threat
On his second day back in the White House, Trump ordered an investigation into US-China trade relations, warning that he may slap a 10% tariff on Chinese goods as early as February 1st. The president cited China’s role in the fentanyl crisis as justification:
“Any penalties on Chinese goods would be based on the fact that they’re sending fentanyl to Mexico and Canada.”
– President Donald Trump
Despite the threat being lower than the 60% figure Trump floated during his campaign, the mere prospect of new tariffs was enough to rattle Chinese markets. The yuan fell against the dollar while the CSI 300 and Shanghai Composite indexes saw their biggest drops in nearly two weeks, ending a brief respite.
EU Also in Tariff Crosshairs
Trump made it clear that China was not his only target, ominously hinting at potential levies on imports from the European Union as well:
“We have a $350bn deficit with the European Union. They treat us very, very badly, so they’re going to be in for tariffs.”
– President Donald Trump
The EU tariff warning came just a day after Trump raised the specter of 25% duties on Mexican and Canadian imports. As the US’s largest trading partners, such a move would have profound economic implications across North America.
Pullout from Global Tax Deal
Compounding the combative trade rhetoric, Trump effectively withdrew the US from the landmark global corporate tax agreement spearheaded by the Biden administration and the OECD. The deal, which established a 15% minimum tax rate in nearly 140 countries, was declared to have “no force or effect” in the US.
Instead, Trump threatened to double the tax rate for foreign companies from nations deemed to impose “discriminatory” taxes on American businesses. The aggressive move sets the stage for a heated international tax policy showdown.
Undoing Biden’s Economic Legacy
In a flurry of executive orders, Trump has moved swiftly to dismantle key elements of Biden’s economic agenda. An “Unleash American Energy” decree has frozen $300 billion in green infrastructure funds, putting hundreds of Department of Energy projects and loans at risk.
Meanwhile, in a symbolic blow to Biden’s inclusion initiatives, Trump has ordered all federal diversity program employees to be placed on leave pending termination of their positions. The brash actions underscore a determined effort to unravel his predecessor’s legacy.
Stargate: Trump’s AI Infrastructure Gambit
Amidst the confrontational trade maneuvers, Trump unveiled an ambitious technology initiative dubbed “Stargate” – a $500 billion partnership with OpenAI, Oracle, and SoftBank to build a nationwide network of AI datacenters. Framed as an investment in the future of the American tech industry, the move suggests a desire to counterbalance the strident protectionist tone.
As global markets absorb the shock of Trump’s aggressive opening salvos, all eyes will be on the responses from Beijing, Brussels, and beyond. With the battle lines being redrawn, the next moves in this high-stakes economic chess match could define the trajectory of international trade for years to come.
