With the launch of the new tariff measures proposed by Trump, international markets suffered alarming declines. Julieta Zelicovich, a professor at the UNR, analyzed the consequences of this event.
Days ago, US President Donald Trump announced the implementation of a "reciprocal" tariff package that will raise tariffs by at least 10% on all products entering the US and much more for dozens of countries that have large deficits with the United States. This measure has had global consequences, truly generating a shock to the economy and the state of international diplomatic relations. Julieta Zelicovich, professor at the Faculty of Political Science and International Relations of the Universidad Nacional de Rosario, explained the current situation and how it impacts the world's economies.
The tariff package, presented under the name "Liberation Day," establishes a universal 10% tariff on all imports, with exceptions for Canada and Mexico. It also imposes additional tariffs on approximately 60 countries deemed to engage in unfair trade practices. "Since assuming its second term, the Trump administration has pursued a very aggressive policy regarding the use of trade policy instruments to achieve various geopolitical or strategic objectives. This increase is being implemented outside the framework of international law, breaking with all the governance structures that countries had built since the end of World War II," emphasized Zelicovich, who holds a PhD in International Relations and a Master's degree in International Business Relations.
Since coming to power, Trump has used trade tools for strategic purposes, whether in immigration issues with Mexico, technological disputes with China, or specific measures against Canada. Starting on April 2, this geoeconomic logic deepened. “The United States government evaluated the 2024 trade balance and, with countries with which it had a deficit, imposed tariffs of 10% to 50% depending on the level of imbalance,” explained Julieta Zelicovich. She added: “These new tariffs are in addition to existing ones, which, while on average low—around 3%—in some cases, such as dairy products, reach 200%. They are also combined with barriers such as 25% for steel and aluminum or specific measures against China.”
The specialist warned that the new tariffs violate the rules of the multilateral trading system, based on principles such as the "most favored nation" principle. "This principle implies that a country must apply the same tariff to all members of the World Trade Organization, unless it has free trade agreements," she explained. However, "Trump's list breaks with that logic by applying different tariffs depending on the country, ignoring the criteria that structured global trade policy and the order of globalization," she noted.
On the other hand, in those international agreements negotiated for more than 60 years, countries had a maximum tariff they could apply. "With these measures, Trump has extraordinarily exceeded the ceiling of his historically agreed-upon maximum tariffs. It's a very strong kick that aims to force a new reconfiguration of the economic and legal power of how the international economy works," he reflected.
The tariff package does not include countries with which the United States maintains a surplus, and also excludes Mexico and Canada, two neighboring countries that found effective leverage, leading Trump to reevaluate how to use coercive instruments against their partners. "This is most likely due to the specific conditions of these two countries in the integration agreement of the USMCA (United States-Mexico-Canada Agreement), and all products that the United States considers compatible with or in compliance with the agreement are excluded. It should be noted that the United States also reserves the right to declare that some products do not comply with the USMCA agreement, and then the tariffs could also apply to Mexico and Canada."
Although China is the United States' main global competitor, it is not the country most affected by the new tariffs. "Reciprocal tariffs for China are 34%, while much poorer countries, such as Laos or Madagascar, face tariffs of more than 45%," explained Julieta Zelicovich. However, when adding previous measures (such as those related to steel, fentanyl, or Sections 301 and 232, imposed during Trump's first term and upheld by Biden), Chinese trade is severely impacted. Since April 9, China has responded with 34% tariffs on US products, prompting Trump to countermeasure with an additional 50% tariff. "Today, much of China's trade with the United States faces tariffs above 100%," warned Zelicovich.
The new tariff measures respond to a dual rationale: on the one hand, they seek to strengthen domestic tax revenue, and on the other, they aim to reshape the global strategic environment and the rules of the international economy. According to Zelicovich, this policy "is part of an extraordinary measure" based on the declaration of the trade deficit as a "national emergency." Under this framework, the president can apply tariffs without congressional authorization, something that would otherwise be prohibited by the US Constitution.
However, Zelicovich warns that these measures are difficult to sustain over time, for both economic and legal reasons. He also points out that during the first trade war with China in 2018, "there were numerous requests for exceptions" driven by industrial lobbies that exerted pressure in Washington, which could be repeated. "It's likely that in a few months we will see modifications to these tariffs, especially the highest ones and those affecting allied or lower-income countries," he noted. The critical point, he explained, will be how the government justifies the continuation of the state of emergency, given that "you can't live in an emergency for an entire term." For now, the scenario remains open and with little international reaction, although tensions cannot be ruled out as the political calendar progresses.
Argentina in check
"For the last 10 years, the United States has been Argentina's second or third trading partner. Brazil comes first, and the second and third places are disputed by the United States or China, depending on the year. These measures will significantly affect a large portion of exports to this country," Zelicovich confirmed.
In the package of measures announced by Trump, Argentina was hit with a 10% tariff. While fuels (its main export) are not affected, other key products such as honey and wine are. "It's likely that some of these exports will be replaced by local U.S. products," Zelicovich warned, anticipating that other countries, having lost access to the North American market, will seek new destinations, which could increase competition and boost imports into Argentina.
In this context, Zelicovich noted that the combination of an appreciated exchange rate and the Argentine government's deregulation of imports creates a favorable scenario for an increase in the trade deficit. "If exports fall and imports rise, Argentina loses its ability to generate the dollars it needs, for example, to pay its debt. That raises international risk and interest rates," he explained. Adding to this scenario are the fall in fuel prices, which affects the export basket and Vaca Muerta yields, and the inflationary impact of the measures in the US, which could lead to a rate hike by the Federal Reserve, further increasing the cost of debt and putting pressure on global inflation.
In recent hours, US Secretary of Agriculture Brooke Rollins backed the White House policy and targeted food imports. "We're going to put America first; not China, not India, not beef from Argentina, not dairy from Canada," she stated. Meanwhile, Trump suspended the tariff measure for 90 days for some countries, including ours, so they can take appropriate measures and, if they wish, open talks to reach trade agreements.
The outlook is not encouraging. Although Argentina has lower tariffs than other regions of the world, this does not necessarily represent an advantage. Zelicovich warns that "there is a very important doubt as to whether, given these lower tariffs, Argentina could export more products to the United States," since if this increase in exports is not accompanied by an equivalent increase in imports from that country, "it is most likely that Argentina will face, in a future review, a new tariff increase." According to the specialist, the Argentine government has little capacity to respond to this scenario and persists with a questionable strategy: "It continues to believe that accommodating behavior generates benefits in Washington, and so far there is no indication that this is the expected response."
Journalist: Gonzalo J. García