Countries and companies alike must prepare for a new phase of economic nationalism and geopolitical uncertainty.

As President Donald Trump begins his second term, global markets are bracing for a renewed wave of tariff-driven trade policies. Having made tariffs a centerpiece of his economic strategy during his first term, Trump has signaled his intent to double down on protectionist policies, with a new proposal for a universal baseline tariff and renewed focus on reshaping America's trade relationships. The implications of this approach could significantly impact the global economy, alter supply chains, and redefine international alliances.

Trump’s proposed second-term trade agenda includes a universal 10% tariff on all imports, aimed at boosting domestic manufacturing and reducing dependence on foreign goods. While this policy resonates with his ‘America First’ base, it raises alarms among economists and international trade experts. Such a sweeping tariff would likely trigger retaliation from major trading partners, potentially sparking a broader trade war with consequences well beyond the US economy.

One of the most immediate global effects would be disruption to supply chains. Companies that rely on global sourcing would face increased costs, leading to price hikes for consumers and shifts in production strategies. Many multinational corporations, particularly in electronics, automotive, and consumer goods sectors, may accelerate efforts to move manufacturing away from China and into countries with less exposure to US tariffs. However, the universal nature of the proposed tariffs means that even these alternative sourcing strategies may offer limited relief.

Trump’s second-term policy could also intensify tensions with China, which remains central to his trade narrative. While the ‘Phase One’ deal during his first term temporarily deescalated US-China tensions, it failed to resolve deeper issues such as intellectual property theft, subsidies to Chinese state-owned enterprises, and technology transfer requirements. Trump has indicated that future tariffs could be used more aggressively to counter what he views as unfair practices by Beijing, further straining the world’s two largest economies and affecting nations caught in between.

Global markets are also concerned about the potential erosion of multilateral trade frameworks. During his first term, Trump weakened institutions like the World Trade Organisation (WTO), blocking judicial appointments and criticising its rulings. A second-term push for unilateral tariffs would likely undermine the WTO even further, encouraging other countries to adopt similar protectionist measures. This could lead to a more fragmented and unstable global trade system, where power politics overshadow cooperative norms.

Developing countries, especially those dependent on exports to the US, stand to lose the most. Nations in Southeast Asia, Latin America, and Africa may face steep declines in export revenue if US tariffs apply broadly. Foreign investment in export-driven economies could also dry up as global companies reconsider market access and profitability under a more protectionist US regime.

Domestically, while some American industries might benefit in the short term, the broader economic impact could be negative. Higher import costs may lead to inflation, reduced consumer spending, and job losses in sectors dependent on global trade. American farmers and exporters could face retaliatory tariffs, as they did during Trump’s first term, weakening their competitiveness in global markets.

On the geopolitical front, Trump’s tariff policies could further strain relations with traditional allies. Tariffs on European and Canadian goods, for instance, have previously led to diplomatic friction. A second term marked by aggressive tariff enforcement may complicate cooperation on broader issues such as climate change, defense, and global security.

Conclusion

President Trump’s second-term tariff policy—anchored by a sweeping universal tariff—has the potential to disrupt the global economic order. While intended to protect American industries and jobs, the broader consequences could include trade wars, weakened international institutions, inflationary pressure, and fractured alliances. As the world watches the unfolding trade agenda from Washington, countries and companies alike must prepare for a new phase of economic nationalism and geopolitical uncertainty.