President Donald Trump swept to victory in the US election on promises to ‘Make America Great Again’. As the MAGA movement turns the US inwards, what could this mean for international trade?
Ahead of the US election last year, President Donald Trump proclaimed “tariff” to be “the most beautiful word in the dictionary”.
Ramping up messages delivered during his first term, the Republican leader protested against foreign influence in the US – arguing for an “America first” approach.
A cornerstone of Trump’s trade policy is his favouring of US firms – a strategy designed to grow the economy and boost employment.
While experts warn this may not work in practice, the president has now taken steps to reduce foreign imports.
A raft of tariffs was announced over the weekend, with more expected to follow.
Euronews outlines the US’s main trading partners, and explores who could be impacted by these levies.
Foreign trade with the US
According to the most recent data, Mexico was the US’s main trading partner last year, accounting for €776 billion worth of business (goods only). That’s 15.9% of the total of US trade.
In second place, Canada accounted for 14.3% of US trade. China and Germany were next – racking up scores of 10.9% and 4.4% respectively.
The value of trade between countries can be split into export and import totals.
The US – for instance – imports more from Mexico than it exports, with ingoing goods worth €466.6bn and outgoing goods worth €309.4bn.
This means the US has a trade deficit with Mexico.
The US also has a trade deficit with Canada – with imports worth €377.2bn and exports to Canada worth €322.4bn.
Imports from China to the US are worth €401.4bn, while exports came to €131.0bn last year.
The US has a trade deficit with many countries, meaning it is buying more than it is sending.
This isn’t the case for countries like the Netherlands – where it sends more than it buys.
An estimated 1,077,956 American jobs were supported by American trade and investment relations with the Netherlands in 2023, according to a Dutch government website.
That figure looks at Dutch companies working in the United States, as well as the export of goods and services from the Netherlands to the US.
When it comes to the UK, US data suggests a trade surplus – meaning the Brits are buying more from the US than they are exporting.
Even so, data from across the Atlantic paints a different picture.
The UK’s Office for National Statistics noted that the UK ran a trade surplus with the US in 2023 of £71.4bn ($88.19bn). That relates to goods and services.
The United States Bureau of Economic Analysis (BEA), on the other hand, reported a surplus of $14.5 billion (€14.2 billion) – suggesting the US is sending more to the UK than it is importing from there.
US and UK economists have been working to realign the data since 2017.
Trump’s reasoning
A 25% US import tax on goods from Canada, as well as a 10% levy on goods from China, will come into force on Tuesday.
Mexico was bracing to be hit with a 25% tariff, although Trump on Monday retracted this threat.
The president argued that tariffs against China, Mexico and Canada were partly linked to their failure to stop fentanyl smuggling into the US.
Mexico’s President Claudia Sheinbaum agreed to send 10,000 troops to the border to tackle the issue – prompting Trump to temporarily halt plans for tariffs.
For EU goods, President Trump has said that tariffs are “definitely” on the way.
He told journalists in Maryland: “They don’t take our cars, they don’t take our farm products, they take almost nothing and we take everything from them.”
One reason for Trump’s support of tariffs is his desire to promote American businesses and employees.
“Under my plan, American workers will no longer be worried about losing your jobs to foreign nations, instead, foreign nations will be worried about losing their jobs to America,” he said on the campaign trail last year.
While fending off foreign competition could help US firms, experts have highlighted a number of risks.
Notably, if US companies continue to buy goods from overseas, they will see their costs rise if overseas suppliers maintain their prices.
Some US firms may choose to pass this expense on to consumers, meaning the cost of goods and services may rise.
If prices rise significantly enough, this could also result in interest rate hikes if the Federal Reserve considers it necessary to tame inflation.
This restricts lending and could negatively impact jobs if businesses are forced to lay off workers.
Another effect of tariffs is they generally cause the dollar to rise in value, which could make the products of US exporters less competitive globally.
This is because they will be relatively more expensive for overseas consumers, potentially widening trade deficits.
“The newly announced US tariffs will have a limited overall impact on Europe”, said Julian Hinz, economist at the Kiel Institute and Bielefeld University.
“While higher prices and supply chain disruptions pose challenges, some European companies could benefit from trade diversions if Canadian or Mexican products become more expensive”, he told Euronews.
Hinz nonetheless added that that this picture will change if the threat of tariffs on the EU materialises.
