At a time when the global tariff war unleashed by Trump threatens to upend the existing global economic system, a pall of uncertainty hangs over the world. The economic futures of nations and peoples around the world hangs in balance. This is particularly true with regard to the state of employment in nations across the world.
By all accounts, it seems that the end result of any prolonged and protracted tariff warfare will be a net loss of employment, at least in the foreseeable future. The fact of that matter is that reciprocal tariffs will lead to a higher cost of doing business, fewer opportunities to export and a protracted era of retaliatory tariffs further compounding the problem. That being stated the severity of impact will vary from nation to nation.
USA
The US under Trump is the progenitor of the on-going global tariff war and it will be interesting to see how its economy gets impacted. Despite what the MAGA president says publicly, the US cannot escape unscathed in any protracted tariff warfare. The 90 day suspension of the enhanced tariff regime for practically all the impacted countries save China shows that the sole super power of the world has to backtrack in order to stave off chaos domestically.
Overtly protectionist measures might see some short term employment gains in sectors like steel and aluminum, the industries aligned with global supply chains will face very negative consequences in terms of higher input costs and a loss of competitiveness. This will definitely lead to job losses in sectors like technology and automobiles in the near future.
European Union
The EU too is quite at risk from global tariff ware fare as its economy is so heavily dependent on international trade. This is particularly true of the major economic power houses, Germany and France. There is bound to be a slowdown of economic growth on EU, if Trump persists with his high tariff plans and there is no deal struct between the two economies in the interim. Employment prospects are likely to face setback in such scenario.
That being stated, the fact that the EU comprises a large internal market which is highly diverse, may somewhat dull the impact of the tariffs. What will also help will be the block’s economic outreach to emerging large economies like India and China.
Japan
Japan’s economy relies on high-value exports to a large extent and that makes it quite vulnerable to tariffs, especially in the case of important sectors like electronics and automobiles, which could see fall in demand and a consequent negative impact on employment. However, given Japan’s position as a technological powerhouse and proven ability to lead by innovation may help it fight the negative impact of high tariffs.
That being stated, Japan, which is also strategically allied with the US was one of the first countries in the word to tray and strike a mutually beneficial trade deal with the Americans.
Mexico
Mexico, which is inextricably tied to the US economy would suffer grievously under a high tariff regime. This is especially true of its automotive industry, which would see serious disruptions leading to job losses. The fact that it is part of USMCA agreement should provide it with a measure of security, at least with regard to automobile industry, which has been kept outside the ambit of the new tariff regime Trump has imposed on Mexico. If it does not arrive at a new trade deal with its northern neighbor and the tariffs proposed by Trump do indeed come into full force, the Mexican economy will be severely hamstrung and witness a significant fall in economic growth.
China
China is the reason that the world is witnessing the tariff war. As the primary target of the US’s tariff salvos its economy which is mostly driven by its exports to nations around the world, particularly the United States is expected to be impacted quite negatively. Employment across its export dependent industries is expected to be at risk, if the trade war is not prevented by way of a trade deal with the US. What China can do to stay in the game is to try and cater to its large domestic market by initiating policy measures to stimulate demand within the country.
It can also try and strike deal with other nations across the world and try and find alternate markets for its manufactured goods.
India
India has been identified as a top tariff imposing nations in the world by the US and have been slapped a very high reciprocal tariff, but has been quick of the blocks in trying to secure a mutually beneficial business trade with America. At the same time India can position itself as an alternate supplier to the US and countries in a scenario where China is bearing the brunt of the US’s tariff onslaught. It is especially true of sectors like pharmaceuticals, textiles and IT, where India can boost exports and create more jobs. That being stated a global economic slowdown would impede the growth of the Indian economy as well. Another thin that India needs to focus on is improving its manufacturing competitiveness. That will lead to more export orders and greater employment.
Canada
The impact of tariffs imposed by the US on Canada will be enormous as exports to the former contribute a whopping 20% of its GDP. The fact that the US would stop importing products from Canada due to high prices on account of tariffs is going to impact the latter’s economy very negatively and cause major job losses. It simply has to strike the right kind of trade deal with the US, and the sober it does that, the better it is for its economy.
Conclusion
With the world having been given a ninety day reprieve by President Donald Trump from reciprocal tariffs to presumably strike separate trade deal with America, it is China which is bearing the full brunt of the brutally high 245% tariffs. But at the same time it has granted exemptions to Chinese tech. products with the view to cushioning American consumers from sudden price hikes on technology products they use in their daily lives.
As the Americans and Chinese slug it out for trade supremacy and the rest of the world tries to figure out a way to fight the Trump tsunami, it pays to remember that when elephants fight it is the grass that gets trampled. The nations of the world need to find a way to protect their national economic interests, and provide employment to their people, even as the two largest economies of the world pummel each other senseless. These are interesting times indeed.