“Presidential Tariff”: How Trump's trade war could shake up the global economy — and America itself

“I’m a big believer in tariffs,” Trump, then a Manhattan real estate developer with budding political ambitions, told journalist Diane Sawyer. Besides Japan, he felt high tariffs were justified for countries like West Germany, Saudi Arabia, and South Korea. “America is being ripped off,” he said. “We’re a debtor nation, and we need to tax and tariff goods to protect this country.”

Trump partially realized his vision during his first presidential term, imposing tariffs on Chinese imports. However, his previous trade war pales in comparison to his latest ambitions. During his campaign, Trump promised universal import tariffs and even higher rates for countries like China and Mexico.

After the election, he escalated his rhetoric, threatening China with an additional 10% import tariff on all goods, citing the influx of narcotics allegedly smuggled into the U.S. from across the pacific. Mexico and Canada were also warned of impending 25% tariffs on all imports unless they took stronger measures to curb the flow of drugs and undocumented migrants into the U.S.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States,” Trump declared on a different social media platform.

If Trump follows through on his long-standing threat to impose 60% tariffs on China, the consequences could be severe for the world’s second-largest economy, where manufacturing plays a critical role. UBS estimates that China could lose around 3% of its GDP over the next three years. Meanwhile, the U.S. would likely see a 1.5% decline in GDP. Mexico and Canada, whose exports to the U.S. represent 27% and 20% of their respective GDPs, would face economic damage comparable to that of China.