Tuba Onğun
04 February 2025•Update: 05 February 2025
ANKARA
Donald Trump’s new tariffs on Canadian, Mexican and Chinese imports are set to have a profound effect on global trade, reducing US exports by a projected 22%, according to a report Tuesday by the Munich-based researcher Ifo Institute.
The ripple effects are expected to hit Canada and Mexico even harder, particularly if those countries implement countermeasures in response to the US tariffs, said Lisandra Flach, director of the Ifo Center for International Economics.
Canada and Mexico, heavily reliant on trade with the US due to their geographical proximity, would face steep declines in exports of 28% and 35%, respectively, if countermeasures are adopted.
In the medium term, Canada would have to expect a 14% decline in industrial value added, while in Mexico it would be a 13% slump.
Even without countermeasures, the effects remain severe as Canada would see a 17% decline in exports and a 15% cut in industrial value added, while Mexico’s exports would drop 21%, with industrial value added falling just under 10%.
China is better positioned to mitigate the effects of US tariffs by redirecting trade to other global markets. The decline in China’s total exports is projected to be relatively modest, at 3.8% with countermeasures, and 2.7% without.
Industrial value added in China would drop by less than 1% under both scenarios.
Interestingly, Germany stands to gain slightly from the tariffs, with total exports potentially increasing 0.5%.
That is largely due to German goods replacing Canadian, Mexican and Chinese products in the US market.
Flach cautioned, however, that the gains might be short-lived as Trump has also threatened tariffs on imports from the EU.
