Trump Unveils 2025 Tariff Plan: Risk of Global Trade War Resurfaces as Allies and Adversaries Alike Condemn the Move

In April 2025, the U.S. declared a "national emergency" and implemented a blanket 10% baseline tariff policy, marking a new era of turbulence for the global trading system. Based on existing trade policy logic and historical precedents, its impacts can be analyzed across five dimensions:

1. Mounting Pressure on Global Trade Rules Reconstruction

WTO Framework Faces Legitimacy Crisis
By invoking the International Emergency Economic Powers Act (IEEPA) rather than WTO exception clauses, the U.S. effectively bypasses multilateral rules. According to Peterson Institute models, if other nations follow suit with unilateral actions, the WTO dispute settlement mechanism could face a 60%+ case backlog, forcing more countries to pivot toward regional agreements.

Accelerated Regionalization of Trade
The EU has launched its "Emergency Trade Alliance Initiative," proposing zero tariffs on 85% of industrial goods among member states. Asean-China-Japan-South Korea free trade talks have accelerated, aiming to eliminate 92% of goods tariffs by 2026. Such "bloc-ification" could cost the global economy $1.2 trillion annually in trade efficiency losses (Brookings Institution, 2024).

2. Profound Reshaping of Global Supply Chains

Rise of Nearshoring
Mexico's share of U.S.-bound exports is projected to jump from 15% (2024) to 22% (2027), with Tesla, Samsung, and others establishing 12 mega-factories along the U.S.-Mexico border. However, Boston Consulting Group warns this restructuring could raise electronics costs by 8–12%.

Intensifying Competition for Strategic Resources
A "militarization of supply chains" is emerging in rare earths, semiconductors, and pharmaceutical intermediates. The U.S. Department of Energy plans a $27 billion strategic mineral reserve, while the EU’s Critical Raw Materials Act mandates 40% domestic processing of lithium and cobalt by 2030.

3. Compound Risks of Inflation and Economic Downturn

Global Price Spirals
Morgan Stanley models show the 10% tariff could directly lift U.S. CPI by 1.7 percentage points. Considering supply chain ripple effects, emerging markets may see inflation rise 3–5 additional points. Indonesia has already imposed export controls on 146 food items.

Monetary Policy Dilemmas
The Federal Reserve faces "stagflationary hiking" pressure, with the federal funds rate potentially breaching 6.5%. This exacerbates developing nations' debt crises, with the Institute of International Finance estimating a 37% surge in 2025 sovereign default risks for emerging markets.

4. Clashes in Digital Trade and Emerging Sectors

Escalating Digital Services Tax Feuds
The U.S. tariff list now includes "digital service packages" covering cross-border cloud and streaming transactions. The EU retaliated with a 9% digital levy on Meta, Apple, and others, risking $40 billion/year in bilateral trade friction.

Emergence of Green Tech Barriers
In renewable energy, U.S. composite tariffs on solar panels (anti-dumping + baseline duties) reach 38.5%, forcing Chinese firms like Longi and Jinko to relocate to Brazil and Saudi Arabia. The International Energy Agency warns this may delay global carbon neutrality by 3–5 years.

5. Reconfiguration of Geo-Economic Power Dynamics

Breakthroughs in South-South Cooperation
The BRICS New Development Bank launched a $50 billion "de-dollarization trade fund" to support local currency settlements. The share of the Indian rupee and yuan in cross-border trade rose from 4.7% (2023) to 8.3% (Q1 2025).

Rise of Military-Economic Complexes
NATO adopted the Economic Security Strategic Framework, incorporating 5G, AI, and 16 other sectors into collective defense. The U.S.-Japan-South Korea "Semiconductor Alliance" aims for 90%+ self-sufficiency in advanced chips by 2026.

Conclusion & Outlook
Unlike the 2018 trade war’s sector-specific focus, this tariff policy’s blanket coverage risks systemic reconfiguration. The short term (1–2 years) will see trade contraction and inflation; the medium term (3–5 years) could solidify regional blocs; and the long term (5+ years) may birth new digital-sovereignty-based trade paradigms. While the international community must guard against a 1930s-style "beggar-thy-neighbor" relapse, innovative mechanisms like blockchain-powered smart tariff agreements and a WTO e-dispute court are also emerging.