The recent tariff actions taken by the United States have severely impacted the global economic market. Today, the editor will break down and explain what is really going on from multiple dimensions.
I. Global Economy: Slow Growth, Rising Prices, Disrupted Supply Chains
1. Economic Growth Dragged Down: Trump's tariff policy has led to a shrinkage in global trade volume. Bloomberg Economics estimates that global trade could shrink by 15%, and J.P. Morgan has raised the probability of a global recession in 2025 from 40% to 60%. The Tax Foundation predicts a long-term decline of 1.3% in U.S. GDP, and global economic growth may drop from 3% to 2.5% (according to IMF estimates). Retaliatory tariffs from China, the EU, and Japan (China imposing a 34% tariff on the U.S., the EU planning to tax $28 billion worth of U.S. goods) have intensified downward economic pressure, pushing the global economy into a "low growth trap."
2. Intensified Inflation Pressure: Tariffs directly increase the prices of imported goods, with U.S. consumers potentially facing an annual cost increase of $1,900. NPR analysis suggests that the prices of consumer goods (like iPhones) could rise by 10%-15%. If companies do not shift production, costs will be fully passed on to consumers. Rising inflation expectations may force the Federal Reserve to delay interest rate cuts or even raise rates, further suppressing economic growth.
3. Financial Market Turmoil: The trade war has triggered risk-averse sentiment, putting pressure on global stock markets. The S&P 500 has plummeted, entering a technical correction zone. The Nikkei 225 has experienced a circuit breaker, A-shares have crashed, and the cryptocurrency market has also declined. The dollar has weakened in the short term, but expectations of interest rate hikes may strengthen the dollar, impacting emerging market debt.
II. Labor Market and Workers: Rising Unemployment, Stagnant Wages, Skill Mismatch
1. United States: Net Job Losses and Stagnant Wages
The Tax Foundation estimates that Trump's tariffs (including Biden's Section 301 and 232 tariffs) will result in a loss of 142,000 full-time jobs in the U.S. The manufacturing sector may benefit in the short term (e.g., slight job increases in the steel industry), but downstream industries (like steel-intensive manufacturing) are laying off more workers due to rising costs. Wage growth is constrained as the ratio of capital stock to labor declines, leading to a decrease in workers' real purchasing power.
2. China: Unemployment Crisis in Export-Oriented Industries
China's export competitiveness to the U.S. has been undermined by a 54% tariff, increasing layoff pressures in export-oriented industries (like textiles and electronics). User @fuxianyi points out that a decrease in China's trade surplus (due to blocked re-export trade) could trigger a "severe unemployment crisis." Workers' skills do not match the needs of domestic industries, making re-employment difficult and putting pressure on the social security system.
3. North American Neighbors: Employment Shock and Labor Shortage
Mexico's automotive industry (accounting for 5% of GDP) faces a 25% tariff, threatening 1 million jobs. Canada relies on the U.S. for 70% of its exports, with agricultural and energy workers facing increased layoff risks. RBC Thought Leadership notes that the aging workforce in North American manufacturing (26% over 55) and reduced immigration have limited labor supply, making it difficult to fill new positions.
4. Global: Declining Labor Productivity
PMC research shows that the tariff war will lead to reduced resource allocation efficiency, with labor productivity expected to decline by 0.9% in five years. Developing countries (like Vietnam and India) face limited exports, slowing job growth, and reduced worker income.
III. Consumers: Rising Living Costs, Reduced Choices
1. U.S. Consumers: Tariffs have raised the prices of imported goods, with NPR estimating that electronic products like iPhones could see price increases of 10%-15%. Data from the Tax Foundation shows that U.S. households are spending an additional $1,900 annually, leading to higher living costs. Consumers are forced to cut back on non-essential purchases (like electronics and clothing) or turn to lower-quality substitutes, resulting in declining consumer confidence (similar to a 10-point drop in the Consumer Confidence Index in 2018).
2. Chinese Consumers: China's 34% tariff on U.S. goods has led to price increases for imported products (like beef and wine), reducing consumer choices. Although the depreciation of the yuan has alleviated some costs, prices for imported necessities (like high-end chips) continue to rise, affecting middle-class consumption.
3. Global Consumers: Consumers in the EU and Japan are also affected. Japan's 24% tariff has led to increased prices for imported cars (like Toyota), while the EU's 20% tariff has raised prices for U.S. goods (like bourbon whiskey). Consumer purchasing power is declining, leading to a contraction in the global consumer market.
IV. Businesses and Supply Chains: Rising Costs and Reconstruction Challenges
1. Increased Business Costs
U.S. companies (like Apple and Walmart) are facing profit squeezes or price hikes due to rising raw material costs (semiconductors, consumer goods). Some institutions point out that U.S. imports will decrease by 25% (about $800 billion), leading to deteriorating profit expectations for businesses.
2. High Costs of Supply Chain Reconstruction
North American supply chains are highly integrated, and the blockage of parts exports from Mexico and Canada has reduced automotive production efficiency. Companies are forced to reconstruct their supply chains (e.g., Apple considering production in Vietnam), but the costs of building new factories are high (supply chain reconstruction takes years, with initial costs rising). Chinese companies are shifting to the EU and Vietnam; although their trade share is increasing, they cannot fully compensate for losses in the U.S. market.
V. Geopolitics and Long-Term Impacts: Economic Fragmentation and Manufacturing Repatriation Challenges
1. Reshaping Geopolitical Landscape
The trade war has intensified U.S.-China confrontation, with the EU halting investments in the U.S. (as stated by Macron), leading to increased economic fragmentation globally. Countries are devaluing their currencies to offset tariff impacts, exacerbating financial market turmoil.
2. Manufacturing Repatriation Difficulties
Trump aimed to promote manufacturing repatriation through tariffs, but the effects have been limited. The high labor costs in the U.S. and a shortage of skilled workers (with a significantly aging manufacturing workforce) hinder this goal. The Tax Foundation notes that the steel and aluminum tariffs during the first term did not increase production, and the repatriation of the footwear and apparel industry is even less likely (as production has completely moved overseas).
VI. Current Tariff Policies of Various Countries: Everyone is Sticking to Their Guns
United States: Trump implemented a 10% global tariff and reciprocal tariffs, with China at 54%, Japan at 24%, the EU at 20%, India at 26%, South Korea at 25%, and Taiwan at 32%. Canada and Mexico have a 25% tariff, but goods compliant with USMCA are temporarily exempt. Additional tariffs of 25%-100% have been imposed on automobiles, semiconductors, and pharmaceuticals, clearly aiming to protect domestic industries.
China: Not to be outdone, China has imposed a 34% tariff on U.S. goods, affecting agricultural products and tech companies, and has placed 11 U.S. tech companies on an export control list, signaling a firm stance.
EU: The EU has imposed tariffs on $28 billion worth of U.S. goods, retaliating in two phases, with the first wave starting in mid-April, affecting items like bourbon whiskey and motorcycles. Plans are also in place to impose a 200% tariff on U.S. alcoholic beverages, with France and Germany directly calling for a halt to investments in the U.S.
Japan: Hit hard by the 24% tariff, Japan has temporarily refrained from imposing additional tariffs but is beginning to reduce its reliance on U.S. agricultural products and is preparing to stimulate its own economy.
Canada: Canada has imposed a 25% tariff on U.S. automobiles until the U.S. lifts tariffs on the Canadian automotive industry, clearly indicating a hardline approach while also negotiating exemptions under the USMCA framework.
VII. Conclusion: The Global Economy is Severely Impacted, How Can Cryptocurrency Investors Recover?
The trade war triggered by U.S. tariffs has severely impacted the globe: economic slowdown, high inflation, labor market turmoil, rising consumer costs, disrupted supply chains, and geopolitical tensions…
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