How commercial tensions really affect the global economy

When the UK became the first country to reach a trade agreement with the United States in May, after President Donald Trump announced the “mutual” definitions, it was welcomed as a plan for other major commercial partners.

But nearly two months passed in front of a second country – Vietnam – she managed to conclude a deal. Meanwhile, the details of the UK agreement are still unclear, unconfirmed or subject to a possible review.

Britain is fighting to secure holes from the highest steel definitions, for example, but Trump’s executive order explicitly reserves the right to reset the duties of 50 percent if it “determines” that the UK does not correspond to a promise to reduce China’s role in supply chains.

The stubborn effects have already felt; Customs tariff revenues in the United States increased nearly four times from one year to $ 24.2 billion in May, while imports from China decreased by 43 percent of the same month in 2024.

But with policies that are clearly in Caprice Trump, it has become very difficult for companies to make long -term decisions about supply chains, according to Neil Shering, the chief economist at Capital Economics, a research company.

He says: “The transportation of plants is an eight to 10 years, but when you cannot predict what is happening next week, not to mention the next year or within five years, mitigating the current situation is the possible strategy.”

The horrific force of the “Tahrir Day” tariff in Trump, which was announced on April 2, was convicted of stopping it for a 90 -day hiatus within a week. Heiko Schwarz, a global supply chain consultant in the field of risk management technology, says the mood has turned from “extreme panic to qualified anxiety.”

Now, since the two countries are hitting new deals with Trump before the deadline on July 9, deep discomfort remains through global management rooms and supply chains.

Many companies resort to strategies. “We are witnessing an increase in business that is looking to diversify the sources, but there is still a lot of” waiting and seeing, “says Simon Gill, the Pinxima CEO, a supply chain consultant owned by Bain & Company.

Importers store the goods and increase their use of worshiping warehouses, which allow importers to keep commodities for up to five years and pay the definitions only when they are launched to the market. Storage costs for worship storage are now four times the cost of non -trained buildings.

Another ripple effect is the port’s congestion – ships still carry 90 percent of global trade – as exporters are looking to avoid the latest customs tariffs. In the largest port in Europe, Rotterdam, CEO of Boudewijn Siemons expects consumers to rise as companies continue to redirect goods flows.

“I am always amazed at the speedy redirect of supply chains,” he says. “This is because the ships have two distinct features: they have a fan and motivation and they can go anywhere you want.”

The repercussions have spread from the declaration of customs tariffs beyond corporate supply chains. Investment decisions are suspended and uncertainty is also a factor in low integration and acquisitions.

“If you are directly affected, you can do something about organizing the fingerprint and the supply chain,” says Mats Pearson, a former UK Treasury Adviser who is now working in EY. “But the greatest effect is the frozen effect on the activity of the deal. This has a chilling effect more than shooting on the business behind the Trump wall (tariff).”

Whether the deadline next week for customs tariff negotiations brings the revival or deepening of uncertainty depends largely on one man. “This is the reason that this crisis differs from the Covid-19 pandemic or the 2008 financial crisis in this main-all of this is due to Donald Trump’s whims.”

Since Trump imposed customs duties for the first time In China in 2018, the trend towards the so-called friends-companies that define or transport establishments in geological and strategic countries with the United States-gathered a pace.

But the re -preparation is complex and risky. Payne reconnaissance Among the chief operating employees, who was conducted before Trump’s re-election last year, was found that although 80 percent plan to increase the burning of the supply chain or rebuilding over the next three years-an increase of 63 percent in 2022-by only 2 % have successfully completed these plans.

“Changing suppliers or changing production is easier than doing it, and because institutions all look at the same sites, which are likely to create restrictions on capabilities in terms of skilled workers and factory space,” says generation.

How trade patterns widely shift from the product to the product, depending on the ease of finding alternative supply sources, according to Olivia White, director of the McKinsey International Institute. Li -Ion batteries, for example, much easier to get the source outside China, for example, laptops. The shirts are much simpler than socks.

“When you start moving to more granules, you will see how different dynamics of the products and different value chains can play,” said White. “Companies are considering how to make sure that their supply chains are more flexible and flexible, even if they are not selected on individual commercial corridors.”

Also, the definitions alone were not good enough for companies to change supply chains, according to Persson at Ey. He says organizational changes – for example, the new rules that require cars sold in the United States that do not contain any Chinese program from 2027 – can be much larger than engines for change.

For high -organization industries such as pharmaceutical preparations, industry analysts say production to the United States will be very expensive and exposed to the extent that relatively high tariffs may not necessarily lead to the transfer of immediate factory.

The Trump administration is considering imposing sectoral fees on drug imports, specifically Ireland has been placed at its intersection. “We’ll get that,” Trump said of Ireland’s position as a base for many of the world’s largest drug makers.

Merck, Roch and Johnson & Johnson emphasized the increase in investment in the United States, while the industry was storing inventory in America to give them a space for breathing if the highest -higher definitions are implemented.

“The main factor is the uncertainty that leads to stagnation in investment,” says Lawrence Lynch, a Metatron Consulting, adding that it is not clear whether the tariff is high enough to force manufacturing to switch to the United States over time.

“It is necessary for years,” Stefan Oilic, head of medicines in Bayer, told reporters in Brussels.

The most concrete result of Trump’s definitions is not yet rearranging the supply chain, but the sudden scarcity of making deals, according to Eye.

A survey of the PWC deals manufacturers found in May that 30 percent either stopped deals or review due to the uncertainty caused by the definitions. Among those who were paid back amid uncertainty, included offers for the Boeing Mobility Unit and its expected sale of 4 billion pounds by the APAX of Insurance Group PIB collection.

The sudden slowdown flew in the face of the investor’s expectations that Trump’s return to the White House will lead to a wave of integration and purchase activity against the background of pride in a state of decomposition, according to Josh Smiegel, the partner in PWC deals.

As a result, SMIGEL calculates, private stock companies retain about 1 trio of assets that – in the absence of uncertainty in Trump – it was possible to re -publish them again on the market if the planned exits did not stop.

He says about the accumulation of increasing deals: “We have never seen anything like him, and still grow in a quarter in the quarter.” “Not only is market dynamics or interest rates, but they are related to geopolitical forces and management that make bold political decisions on the definitions that I do not think that the investment community expects it.”

“Our customers are not sure what the stadium is now.”

Even if Trump’s trade war is considered Analysts warn that there is something of a “phone war” in some circles, as American stock markets have wiped their losses after April after April, that they are still a long -term threat to the American economy.

Despite sculpting and climbing, the average actual tariff for the United States is now 15.8 percent, according to the accounts of Yale Budget Lab-is the highest rate since 1936 and an increase of more than 13 percentage points since Trump returned to his post in January.

The World Bank and the Organization for Economic Cooperation and Development reduced the classification of their expectations for the United States and the global growth last month, in part due to uncertainty about commercial policy.

There is already Early signs The tariffs of definitions have an effect on the prices of various elements such as games, bananas and large electrical appliances that do not contain alternative sources, which makes them more vulnerable to the effects of customs tariffs.

An example of unintended consequences, Trump’s decision to double the definitions of all imported steel to 50 percent on June 3 belongs to the American market, according to analysts, as the prices of raw solid products as well as the final users in the American manufacturing industries.

Experts warn that the tax – the UK seeks to obtain a lower rate – is likely to have an opposite effect on the intended effect. “The American steel,” says Wayne Winjenn, a research colleague at the Pacific Research Institute, a free market research center.

“Trump is not wrong when he says that the increase in customs tariffs will harm other countries. He forgets that the greatest impact will be on the United States,” Winjden added. He and others cite the race in 2018, when the first round of the Trump steel tariff was created 1000 jobs in the steel industry, but it costs 75,000 jobs in other sectors, according to Econofact, a non -partisan publication for the Fletcher School at the University of Tats.

The possibility of further uncertainty and sudden swing in politics during the Trump era weighs the future commercial morale, according to Atakan Paxcan, the American economist at Burnberg Bank.

He wrote in June, “The companies that were optimistic about tax cuts and the abolition of restrictions at the beginning of the year,” he wrote in June. Note searchQuoting multiple indicators of business plans for investment and new requests in both services and contracting with manufacturing after April 2.

He added: “At first glance, it may seem that the customs tariff did not last except with the feeling of consumers and commercials instead of causing real economic damage. However, the passive impact of definitions is still in the pipeline.” “We expect clearer signs to show the damage of customs tariffs in the coming months.”

In order for more data to appear, investors and business leaders should remain ready to respond to any result. “There is a great danger to investment, but at this point, we only see it in the intentions of investment, not in difficult numbers,” says Shearing at Capital Economics. “It can crystallize – or it can go away.”

Imagine data by Amy Port