Punitive tariffs, uncertainty and the global economy – How Trump’s trade policy is affecting companies and markets

Since the introduction of punitive tariffs under Donald Trump’s presidency, international trade relations have changed noticeably. The “America First” policy was aimed at protecting American companies, but the effects are being felt worldwide – especially on the stock markets.

What are punitive tariffs – and why were they introduced?

Punitive tariffs are additional import duties on certain foreign goods. The aim is to make foreign products more expensive and thus strengthen domestic industry. Trump imposed tariffs on steel, aluminum and a large number of Chinese products, among others – officially to combat “unfair trade practices” and reduce the US trade deficit.

Effects of trade policy on the economy – more damage than protection?

In the short term, certain sectors such as the US steel industry appear to be benefiting. But in the long term, the tariffs lead to higher production costs, trade conflicts and countermeasures by other countries – above all China.

This has noticeable effects:

• Uncertainty on the stock markets: trade conflicts and the fear of escalation regularly lead to price slumps. Investors react nervously to new tariff lists or tweets from the White House.
• Declining investments: Companies postpone investments as economic conditions become unclear.
• Disrupted supply chains: Global production processes are closely interlinked – punitive tariffs break these chains, leading to bottlenecks and cost increases.

Companies’ fears

For companies – especially those with global supply chains – punitive tariffs pose a considerable risk:

• Cost increases: Imported goods become more expensive, margins shrink.
• Planning uncertainty: If political decisions can change overnight, long-term planning is hardly possible.
• Loss of sales markets: Countermeasures by other countries can lead to domestic products becoming less competitive on foreign markets.

What can companies do?

Despite the uncertainty, there are strategies that companies can use to react:

• Diversification: those who do not rely on just one supplier or market are better equipped.
• Nearshoring or reshoring: Some companies bring production processes back to Germany or nearby countries in order to avoid customs duties.
• Political monitoring: Companies are building up targeted expertise in order to better assess geopolitical risks and react in good time.

What do the tariffs mean for trade relations?

Trump’s trade policy marked a shift away from traditional free trade towards a more protectionist course. The result: mistrust between trading partners, increased trade disputes before the WTO and an increasing fragmentation of global markets. Trade agreements have been questioned or renegotiated, such as the NAFTA agreement (now USMCA).

In the long term, there is a risk that countries will become more isolated from each other – with negative consequences for the innovative strength and efficiency of the global economy.

What is on people’s minds?

Many are asking themselves questions such as:

• “Will my products become more expensive?”
• “Is my job at risk as a result of the trade conflict?”
• “Can my company survive if key supplier parts suddenly cost twice as much?”
• “Is a new economic crisis coming?”

Such worries are not unfounded. But it is important to stay informed and follow political developments closely. For entrepreneurs and investors in particular, early action can be crucial.

Between risk and reality

Punitive tariffs are an instrument of political power – but their economic side effects are often more serious than their benefits. For companies, this means that the world remains unpredictable. Flexibility, strategic thinking and a keen eye on global developments are more important than ever.

At LEADING MINDS, we provide renowned speakers with in-depth expert knowledge of international trade relations, punitive tariffs and their economic impact.

Our experts on trade, politics and the global economy are:

Dr. Josef Braml – He is an expert on America and talks about global political changes and transatlantic relations.

Macroeconomist and strategy consultant Dr. Daniel Stelter deals with the economic and financial policy issues of our time and the challenges of the constantly changing global markets.

Prof. Dr. Dr. h.c. Monika Schnitzer – The economist and chairwoman of the German Council of Economic Experts will give lectures on the turning point in economic policy, competition policy and the future of the German economy.

Political scientist and Americanist Dr. Tobias Endler is a sought-after speaker on US domestic and foreign policy, as well as transatlantic relations in politics, business and culture.

Anders Fogh Rasmussen was Prime Minister of Denmark and NATO Secretary General. He is known for his clear statements on the current geopolitical situation, global trade relations and the balance of power.

In lectures and panel discussions, our experts analyze current developments, highlight opportunities and risks – and provide valuable impulses for companies, politics and society.

Please contact us: +49 (0)30 640 777 42 or contact@leading-minds.com