On March 12, 2025, the Trump administration’s “America First” policy once again ignited tensions. The U.S. imposed a 25% tariff on all imported steel and aluminum products, affecting traditional allies such as the EU and Canada. This move reflects not only an adjustment in trade policy but also subtle shifts in the global economic landscape.
However, just the day before (March 11), Trump had announced plans to impose an additional 25% tariff on Canadian steel and aluminum, bringing the total tariff rate to 50%.
After emergency negotiations between senior officials from both countries, he suddenly withdrew the decision. As the saying goes, the only thing that can defeat Trump is the next version of Trump.
This erratic behavior has persisted for three weeks, severely shaking the confidence of businesses and consumers in the market and dragging down market performance. Last night, the three major U.S. stock indices continued to decline, reflecting market concerns over this uncertain policy.
Many in the textile industry have deeply felt the market chill. Conventional gray fabrics are harder to sell, and weaving factories are producing just to break even. Customers are increasingly difficult to find, with large orders shrinking and small orders offering less profit than before.
EU and Canada’s “Tit-for-Tat” Response
The U.S.’s escalating tariffs have prompted strong responses from the EU and Canada. This “tit-for-tat” game has been brewing for some time. In 2018 and 2020, the EU retaliated twice against U.S. steel and aluminum tariffs but ultimately compromised with “suspension measures.” This time, Europe is standing its ground.
EU President Ursula von der Leyen stated, “This U.S. measure will harm employment, drive up prices, disrupt supply chains, and bring disaster to both the EU and U.S. economies.”
The EU announced that starting April 1, it would impose tariffs on $26 billion worth of U.S. goods, covering categories such as ships, whiskey, and motorcycles. The measures will be implemented in two phases, with full effect by April 13.
This move is expected to cost the European steel industry 3.7 million tons of exports, and the U.S., as its second-largest export market, will also be impacted.
Canada is not backing down either, imposing a 25% tariff on $29.8 billion worth of U.S. goods, including steel, aluminum, computers, and sports equipment, effective March 13.
As the largest importer of U.S. steel and aluminum, accounting for over 80% of U.S. imports, Canada’s countermeasures directly target core U.S. export sectors.
Trump’s Further Threats and Escalating Risks
Facing retaliation from allies, the Trump administration has not backed down but instead escalated its threats. Trump claimed he would introduce “reciprocal tariffs” and plans to further increase auto tariffs in April, potentially raising rates tenfold, targeting countries like Japan that rely heavily on auto exports to the U.S. This hardline stance has triggered a series of economic chain reactions.
Domestically, U.S. steel and aluminum prices have surged, with steel prices up 30% and aluminum prices up 15%. Automakers’ profits are being squeezed, inflationary pressures are rising, and the Federal Reserve’s room for interest rate cuts is further constrained.
Meanwhile, the Bank of Canada has announced a rate cut due to trade war risks, noting that tariff policies are dampening consumer and investment confidence.
Restructuring the Global Trade Landscape and New Opportunities
While the trade war has brought many negative impacts, it has also prompted countries to reassess the trade landscape. Rising U.S. manufacturing costs and shrinking exports from allies have created a “lose-lose” situation. However, this also presents new opportunities for cooperation.
For example, China accounts for less than 1% of U.S. steel and aluminum exports. Through diversified market strategies, China has successfully mitigated risks, providing an opportunity to optimize the global trade landscape.
Despite increased trade policy uncertainty and potential new tariffs, global merchandise trade is expected to maintain growth. The World Trade Organization (WTO) predicts a 3% growth in global goods trade in 2025. Asian economies, particularly China and ASEAN countries, will continue to lead the trade recovery.
As the world’s largest merchandise trading nation, China’s share of global exports is expected to remain around 14.2%. Additionally, China demonstrated strong foreign trade resilience in 2024, with total imports and exports growing by 4.9% year-on-year, with exports and imports up 6.7% and 2.4%, respectively.
No Winners in a Trade War: Moving Forward Together
The current situation marks a full escalation of trade protectionism in the Trump 2.0 era. If all parties continue to escalate, the world could fall into a vicious cycle of “tariffs-retaliation-further escalation,” with consumers, businesses, and the global economy ultimately paying the price.
The short-term impact of these retaliatory tariffs on the textile industry is limited, but they may accelerate global supply chain restructuring and technological transformation. Looking ahead to 2025, despite external uncertainties, businesses need to closely monitor policy dynamics, optimize supply chain resilience, and seize new opportunities in green transformation and regional trade agreements.
However, history has shown that there are no real winners in a trade war. As long as countries work together through multilateral negotiations, systemic crises can be avoided, paving the way for a brighter future in global economic development.
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