Trump’s trade war escalates

They say there are no winners in a nuclear war — and there’s another type of conflict where no one truly gains: a trade war. The primary weapon in this economic standoff is the imposition of tariffs. The trade war, which President Donald Trump gradually initiated in February, has become more intense than expected. Though economic in nature, this conflict carries the potential to reshape the global political order that has developed over decades.

At its core, this standoff now involves two principal actors: the United States and virtually the rest of the world. That alone makes the situation extraordinary. Moreover, developments once deemed unthinkable are now edging toward reality — such as a potential alliance between the European Union and China against the US or Central Asia emerging as a key player in the EU’s counter-strategy to Trump's trade policies.

The Early Days of the “War”

On January 20 of this year, during his inauguration, President Trump laid out his plan to revise trade policies. By February, he had introduced new tariffs on goods from Mexico, Canada, and China. These countries quickly voiced their dissatisfaction. While Mexico and Canada managed to delay the implementation of tariffs for a month by addressing Trump’s concerns over migration and drug trafficking, the reprieve was short-lived. Once the grace period ended, the tariffs were enforced, marking the start of a global-scale “war.”

Initially, tariffs ranged from 10 to 25 percent. But over time, they failed to meet Trump's expectations. On April 2, he escalated the conflict by applying tariffs to nearly every country in the world — a total of 185. Even the uninhabited islands of Heard and McDonald, home only to penguins, were not exempt. The harshest tariffs targeted imports from China, Vietnam, and Cambodia. Declaring a national emergency in the US economy, Trump expanded his authority to impose such measures.

According to the White House, the US would calculate the average tariffs other countries impose on American products and respond by levying half that amount in return. This resulted in 20 percent tariffs on goods from the European Union, 32 percent on Taiwan, and 30 percent on South Africa — among others.

Trump’s decision to apply a 10 percent tariff to the uninhabited Heard and McDonald Islands — territories of Australia — was later explained as a precaution to prevent other nations from using them as transit hubs to bypass tariffs.

Furthermore, starting April 3, the US imposed an additional 25 percent tariff on imported cars, light trucks, and auto parts. These were separate from the already broad tariffs applied to specific countries.

But, the most complex and significant part of the trade war remains Trump’s conflict with China. Although an initial tariff of 34 percent was applied, it didn’t stop there. US Treasury Secretary Scott Bessant later announced that the cumulative tariff rate on Chinese goods had reached 54 percent after additional increases, compounding an earlier 20 percent hike. This dramatic escalation sparked the current global trade war.

While many countries, aside from China, Canada, and the EU, expressed concern after the April 2 announcement, their responses were notably cautious. It appears many are trying to avoid drawing the ire of President Trump, who has demonstrated a disregard for conventional diplomacy. Staying off the radar of the unpredictable “old man” in Washington has become a top foreign policy objective for some nations.

Uzbekistan: Not Left Out of the Trade War

Back in 2008, when the US mortgage crisis triggered a global financial meltdown, Uzbekistan — then relatively closed off — was somewhat insulated. Yet this isolation came at a cost, yielding limited real economic results beyond government-inflated figures of growth in the early 2000s. Today, however, Uzbekistan is integrated into global processes and is assuming a more active roles on the world stage.

This was evident during the first-ever Central Asia–EU summit, held in Samarkand on April 3–4. European Commission President Ursula von der Leyen described the summit as part of the EU's strategy to diversify trade relationships in response to US-imposed tariffs. Her comments indicated that the EU is seeking new trade partners and markets — and Central Asia, particularly Uzbekistan, is becoming an important part of that effort.

During a video conference on April 9, President Shavkat Mirziyoyev addressed the rising global economic tensions and emphasized the need to enhance regional tourism and fast-track investment projects with foreign partners. He noted that over just three or four days, international financial markets had lost $10 trillion, signaling a global economic emergency.

“Those who believe these disruptions won’t affect us are mistaken,” he said. “Some of those lost funds could have reached us in the form of investments, loans, or Eurobonds!”

In light of this, the President instructed all regional governors to conduct daily economic analyses and focus on preserving production, jobs, and exports. Sector leaders were told to propose weekly solutions, while district and regional officials were tasked with resolving the problems faced by local entrepreneurs.

While the direct impact of Trump’s tariffs on Uzbekistan remains limited, the country was among a group of “lucky” nations — including the UK, Egypt, Turkey, Colombia, Peru, Argentina, Chile, and Singapore — that faced only a minimal basic duty of 10 percent. However, Trump’s tariffs against China, which are approaching the 200 percent threshold, could still have indirect effects on Uzbekistan.

During Trump’s first term, the trade war with China affected the Uzbek economy by reducing its exports to China and increasing the volume of Chinese imports. A repeat of such economic friction could again pose challenges for Uzbekistan’s trade balance and economic growth.

A “Knockdown” in World Markets

Donald Trump’s sweeping decision to impose tariffs on all goods entering the United States — alongside separate, steeper tariffs on the country’s largest trading partners — triggered a significant downturn in US financial markets. According to The Wall Street Journal, this level of market disruption has not been seen since the height of the COVID-19 pandemic.

On April 3, the day after the announcement, the impact was immediate. The S&P 500 index dropped by over 4% at the start of trading. The Nasdaq plummeted by 4.9%, the Dow Jones Industrial Average fell by 3.7%, and the Russell 2000 index — representing small-cap companies — sank nearly 7%. The collective market value of the largest US corporations declined by $2 trillion. In total, the capitalization of the US stock market shrank by $2.7 trillion, marking the sharpest single-day loss since 2020.

Apple suffered one of the most significant hits, with its shares falling 9.5%. This decline was largely because the tech giant’s main manufacturing operations are based in China, the primary target of the harshest tariffs. As a result, Apple’s market value plunged by $300 billion. The impact extends beyond the company’s stock — it is also expected to have serious implications for American consumers. With the cost of production rising sharply, estimates suggest that the newest iPhone models could retail for as much as $3,500.

Retailers heavily reliant on Chinese imports also suffered steep losses. Shares in major retail chains like Target and Dollar Tree, which stock a large volume of Chinese-made goods, fell by more than 12 percent. Amazon’s market capitalization decreased by $165 billion, while Nvidia saw a $183 billion loss.

The financial damage wasn’t limited to corporations. According to The New York Times, some of Trump's most prominent supporters among the business elite experienced staggering losses. Elon Musk lost $6 billion as Tesla shares tumbled, and Stephen Schwarzman, CEO of the investment giant Blackstone Group, saw his wealth decline by $3 billion.

Even Trump himself wasn’t spared. Forbes reported that his net worth took a hit of half a billion dollars in the immediate aftermath of the tariff announcement.

The oil market also experienced its most significant drop in the last three years. Brent crude futures fell by 7 percent, dipping below $70 per barrel. Prices continued to slide, eventually reaching as low as $59.

Reports suggest that the scale of the tariffs was far greater than many had anticipated. According to internal White House projections, these measures are expected to generate $6 trillion in revenue for the US federal budget over the next decade. Officials believe this could help offset the ballooning budget deficit, which hit an unprecedented $3 trillion in 2024. Forecasts indicate that this figure may surpass last year's record in 2025.

Still, the long-term consequences could be severe. Analysts at JP Morgan described Trump’s tariff initiative as the most significant tax overhaul in the US since the late 1960s. While it may improve the budget’s bottom line, it could also trigger a recession — a period of stagnant or negative economic growth — in both the US and the European Union. Worse, it may usher in a global period of stagflation, characterized by rising prices without corresponding economic growth.

Asian markets have borne the brunt of the initial shock. The BBC reports that stock exchanges across the Asia-Pacific region have been spiraling downward in response to Trump’s tariff regime. The MSCI Asia Pacific index — which tracks large- and mid-cap stocks across 13 countries in the Pacific Rim — fell by 7.1 percent, the biggest drop since the 2008 global financial crisis. Japan’s Nikkei 225 index dropped more than 20 percent from its recent high, entering bear market territory.

Given that a vast share of the world’s goods are produced in Asia, these nations are feeling the heaviest burden from the new US tariffs. They also fear that a prolonged trade war could plunge the global economy — including the United States — into a deep recession. In response to the unfolding events, Wall Street investment firms have revised their outlooks. JP Morgan analysts now estimate a 60 percent chance of a recession, either in the United States or globally, following Trump’s sweeping tariff policies.

Call for the US to Step Down

Canadian Prime Minister Mark Carney announced that he had imposed retaliatory tariffs against the United States and declared Ottawa ready to replace Washington as the leader of the global economy. According to Carney, Canada is prepared to lead a new coalition of nations amid the United States' declining global influence. He emphasized that the 80-year era of US dominance had come to an end, stating that the age of alliances based on trust and free trade was over.

Carney also introduced a 25% tariff on cars and trucks imported from the United States. Based on his calculations, these tariffs are expected to bring an additional $5.7 billion in revenue to Canada’s budget. This is on top of the approximately $42 billion the country has already earned from the 25% tariffs on US goods imposed on March 4 of this year. However, he clarified that the new tariffs would not apply to auto parts, allowing manufacturers such as Stellantis, Ford, and General Motors to continue importing vehicles duty-free from their Canadian factories.

Meanwhile, China has approached the tariff crisis not as a problem but as a potential opportunity. While most countries around the world have been negotiating to secure concessions on the tariffs announced by the US President, China has taken a notably different stance. Over 70 nations have formally requested talks with the US, but China moved swiftly in a different direction. Just 48 hours after Trump's announcement that shook global markets, China — the world’s second-largest economy — imposed harsh countermeasures not only against US goods and companies but also against Canada.

China’s State Council revealed it was placing additional 34% tariffs on all imports from the United States. This move was interpreted as a clear sign that China was fully prepared for an extended economic confrontation. The message was delivered to both domestic audiences and the international community through state-controlled media and official statements. In essence, China remains resolute, fully aware that a trade war will hurt all parties involved — but could also weaken its chief global competitor across the Pacific.

However, the numbers reveal the high stakes for both sides. In 2024, trade between the US and China amounted to nearly half a trillion dollars.

The Risk of Losing Europe

In response to Trump's tariffs, China quickly introduced its own 34% levies on US imports. Yet, Trump escalated the situation further. On his Truth Social page, he threatened to impose an additional 50% in tariffs on Chinese goods starting April 9 unless Beijing withdrew its retaliatory measures. Trump even warned that negotiations on tariff policies could be scrapped entirely. China, however, remained unfazed. As the US followed through with its threats, total tariffs on Chinese goods rose to 104%, following successive increases of 20%, 34%, and then 50%.

But China didn’t stop either. On April 9, the Chinese Ministry of Finance unveiled a new 50% counter-tariff, raising China’s overall duties on US imports to 84%. The running total reached 104–84. Still, this was far from the peak.

Shortly thereafter, Trump unexpectedly announced a 90-day postponement of the new tariffs — imposed on April 2 — for 75 countries willing to begin negotiations. But since China had taken the opposite course, the US raised the rate applied to it from 104% to 125%. Then, according to reports from April 10, President Trump went even further, increasing the tariff on China to 145%. China responded immediately, once again mirroring the US, raising its tariffs on American products from 84% to 125%.

With that, the trade war reached its most intense stage to date.

However, amid this deepening conflict, the United States now faces a serious dilemma. Either it abandons its aggressive new tariff strategy or continues down this path — effectively pushing Europe closer to China and ushering in a multipolar world order. Trump’s current approach is accelerating the necessity of stronger ties between the European Union and China, a notion that has moved beyond speculation into concrete diplomatic signals.

On April 11, Chinese President Xi Jinping met with Spanish Prime Minister Pedro Sánchez in Beijing and expressed his hope for deeper cooperation. Xi stated that China views the EU as a significant political and economic force in a multipolar world and emphasized the importance of joint efforts to uphold economic globalization and protect the international trade system. He also urged China and the EU to stand united against the US tariffs.

Meanwhile, Trump temporarily paused tariffs on the EU, and in return, the European Union suspended its retaliatory measures. Still, European Commission President Ursula von der Leyen made it clear that if negotiations fail, countermeasures will be reinstated. This opens the door for closer cooperation between China and the EU — two powers traditionally seen as strategic rivals.

The current trade relationship between the EU and China already exceeds that of the US and China. For example, in 2024, trade between China and the European Union reached $785.82 billion.

Trump’s Reality and Goals

President Trump defended his sweeping economic decisions by citing concerns over trade imbalances and national security. He argued that unequal trade relationships — and especially the US trade deficit — posed an “unusual and extraordinary threat” to the nation.

He reiterated his desire to bring factories and manufacturing jobs back to America. Trump believes that the newly imposed tariffs will compel foreign manufacturers to shift production to the United States to avoid paying duties. If companies produce their goods domestically, they won’t be subject to tariffs.

Trump has also made it clear that no country — not even close allies — will be granted special treatment. This includes Israel. During Prime Minister Benjamin Netanyahu’s recent visit to the White House, Trump clarified that Israel, too, would not be exempt from his tariff policy.

Speaking aboard Air Force One on April 6, Trump downplayed concerns about the market downturn. He said that while he doesn’t want things to collapse, sometimes “you have to take medicine to fix something,” hinting that the tariffs are a calculated move aimed at extracting concessions from trade partners. He also revealed that he had spoken with European and Asian leaders over the weekend, many of whom were trying to convince him to soften or delay the tariffs scheduled to take effect.

So, what exactly is the United States aiming to achieve?

The core objectives behind Trump’s new tariffs include the protection of domestic industries — particularly in technology and automotive manufacturing — from low-cost Chinese imports. The policy also targets China’s state-subsidized industrial practices, often criticized as dumping, where goods are sold below market value to undermine foreign competitors. This issue has been at the heart of tensions not just between the US and China but also within the World Trade Organization itself.

Another key goal is to fix the imbalance in trade flows. The US aims to establish more equitable export-import relationships with its partners. The newly introduced tariffs reflect this strategy.

For instance, a new minimum 10% tariff was imposed on Uzbekistan. This stems from the unequal trade balance between the two countries: in 2023, US exports to Uzbekistan totaled $438 million, while Uzbek exports to the US amounted to only $103 million.