Trade policies are more than just economic tools—they shape global relationships, influence domestic industries, and impact millions of lives.
Trump’s latest trade policies, emphasizing protectionism, deregulation, and renegotiation of trade agreements, are poised to create significant shifts in the United States and its key economic partners.
Domestic Economy: A Balancing Act
The United States has historically benefited from preferential trade agreements.
For instance, the U.S.-Mexico-Canada Agreement (USMCA) facilitated over $1.5 trillion in trade among the three nations in 2024, as highlighted by U.S. Census Bureau statistics. Similarly, the General System of Preferences (GSP), according to WTO data, allowed duty-free imports of goods worth $21 billion from developing countries in 2023.
However, Trump’s policies, which include increased tariffs and stricter trade terms, could disrupt these benefits.
For example, the imposition of a 25% tariff on steel imports in 2024 led to a 15% increase in domestic steel production but also raised costs for industries reliant on steel, such as automotive manufacturing.
This dual effect underscores the challenge of balancing domestic industry protection with broader economic stability.
Impact on Key Economic Partners
The United States’ trade agreements span the globe, from the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) to bilateral deals with nations like Japan and Australia.
According to WTO data, under CAFTA-DR alone, U.S. imports from Central American nations totaled $35 billion in 2024, supporting industries like textiles and agriculture.
Trump’s policies, however, could strain these relationships. Renegotiating terms or imposing tariffs might reduce the competitiveness of exports from countries like Guatemala or Morocco.
The World Bank estimates that a 10% tariff increase on agricultural imports could lead to a 5% decline in export revenues for developing nations.
Such disruptions could destabilize economies heavily reliant on trade with the U.S.
North America: A Shift in Trade Dynamics
The United States’ trade relationships with Canada and Mexico, governed by the USMCA (formerly NAFTA), are central to North American trade. WTO data reveals that trade between these three nations exceeded $1.5 trillion in 2024, with Canada and Mexico being the top two trading partners of the U.S.
However, Trump’s policies, including renegotiations of the USMCA, have introduced stricter rules of origin for automotive products and increased labor provisions.
While these changes aim to protect U.S. industries, they have also raised production costs, potentially impacting competitiveness.
For example, the automotive sector, a cornerstone of North American trade, has seen a 10% increase in production costs due to stricter content requirements.
As reported by the U.S. Census Bureau, this led to a 5% decline in vehicle exports from the region.
Additionally, tariffs on steel and aluminum imports strained relations with Canada, which retaliated with tariffs on U.S. goods, affecting industries like agriculture and manufacturing.
Europe: Navigating New Trade Barriers
Europe, a significant trading partner of the U.S., has also felt the impact of Trump’s trade policies. The European Union (EU) is the largest exporter of goods to the U.S., with exports totaling $500 billion in 2024, according to WTO data. However, the imposition of tariffs on European steel and aluminum, as well as threats of tariffs on automobiles, have created tensions.
These policies have led to a 7% decline in European exports to the U.S., particularly in the automotive and machinery sectors.
In response, the EU has diversified its trade relationships, increasing exports to Asia and other regions. For instance, Germany, the EU’s largest economy, recorded a 12% rise in exports to China, mitigating some of the losses from the U.S. market.
Beyond Tariffs: Deregulation and Policy Shifts
Trump’s economic agenda extends beyond tariffs, with significant deregulation efforts that could reshape global business practices. One notable example is the recent suspension of the Foreign Corrupt Practices Act (FCPA), a decades-old anti-bribery law.
This law prohibited U.S. companies from bribing foreign officials to secure business advantages.
While its enforcement has been credited with curbing corruption globally, critics argue that it placed American businesses at a disadvantage in international markets.
The suspension of FCPA enforcement, announced in February 2025, aims to boost U.S. economic competitiveness by removing barriers to commerce abroad.
However, this policy shift has sparked concerns about its long-term implications. Transparency advocates warn that weakening anti-bribery laws could tarnish America’s reputation as a safe place to do business and encourage corrupt practices globally.
For example, countries like France and Japan may follow suit, creating a “Wild West” scenario in international trade.
Who Loses the Most?
While Trump’s trade policies aim to protect American industries, the biggest losers appear to be U.S. consumers, industries reliant on global supply chains, and developing nations heavily dependent on trade with the U.S.
U.S. Consumers and Households
Tariffs function as a tax on imported goods, and the costs are often passed on to consumers. According to the Tax Foundation, the average U.S. household faced an additional $1,072 in annual expenses due to tariffs on goods from Canada, Mexico, and China. For example, tariffs on washing machines increased their prices by $86 per unit, while dryers—though not directly taxed—saw a $92 price hike due to bundled sales.
These price increases disproportionately impact low- and middle-income households, tightening budgets and reducing purchasing power.
Industries Dependent on Imports
Industries reliant on imported raw materials, such as manufacturing and construction, have faced significant challenges.
The 25% tariff on steel and aluminum imports, for instance, led to a 9% increase in steel product prices. While this policy created approximately 1,000 jobs in the steel industry, it resulted in a loss of 75,000 jobs in downstream industries like automotive manufacturing and construction. The U.S. oil and gas extraction sector also suffered, losing $586 million in production between 2018 and 2021 due to increased costs for steel and aluminum.
Agriculture and Retaliatory Tariffs
The agricultural sector has been particularly hard-hit by retaliatory tariffs. For example, U.S. soybean exports to China dropped by 20% in 2024, costing American farmers billions in lost revenue. Similarly, retaliatory tariffs from Canada and the European Union on U.S. agricultural products have disrupted supply chains and reduced market access for American farmers.
Developing Nations
Developing countries that rely heavily on trade with the U.S. are among the hardest hit.
For instance, Guatemala and Morocco, which benefit from preferential trade agreements, face reduced competitiveness as tariffs and renegotiated terms take effect.
The World Bank estimates that a 10% tariff increase on agricultural imports could lead to a 5% decline in export revenues for developing nations.
This economic instability can exacerbate poverty and hinder development efforts in these regions.
Global Supply Chains
The ripple effects of these policies extend to global supply chains.
The imposition of tariffs on Canadian steel and aluminum, for example, added $7.5 billion in annual costs, disrupting North American supply chain resilience.
This has led to higher production costs for U.S. businesses and reduced competitiveness in global markets.
Trump’s trade policies have reshaped the economic landscape in North America and Europe, creating both challenges and opportunities. While the U.S. aims to protect its domestic industries, the ripple effects on its trading partners highlight the interconnectedness of the global economy.
The delicate act of balancing protectionist measures with cooperative trade relationships will determine the long-term sustainability of these policies. As history has shown, no economy exists in isolation, and fostering mutually beneficial partnerships remains critical to global stability and progress.
Data Scientist 