Tariff Wars: A World Heading Towards Economic Uncertainty?

The announcement of tariffs by Donald Trump against Canada and Mexico marks the beginning of a new era in global trade—an era of tariff wars. As dictated by the law of action and reaction, countries subjected to tariffs will inevitably retaliate. Canada and Mexico have already responded, while China and the European Union (EU) are preparing to take similar measures.

Although ASEAN has not yet been directly targeted, complacency is not an option. As the global economy becomes increasingly protectionist, foreign investment in the region is likely to decline. Investors are inherently averse to uncertainty; they seek long-term stability, particularly in business and trade environments. If the trade war escalates, major investments such as factory openings and corporate expansions will be delayed due to rising risks.

Furthermore, the United States’ strategy of leveraging the Federal Reserve as an economic weapon is expected to trigger liquidity issues on a global scale. Countries heavily reliant on the U.S. dollar—particularly those dependent on exports—will face challenges in securing capital and financing. The instability in bond markets will make it more difficult for businesses to obtain loans, while global demand for goods and services may weaken.

For nations like ours, which are currently implementing fiscal austerity measures—cutting subsidies and reducing deficits—the impact will be even more pronounced. As the government curtails spending while foreign investment diminishes, domestic economic circulation will slow. Consumer purchasing power will decline, and businesses will suffer from reduced liquidity in the market.

Trump’s actions are not merely standard trade policies; they represent a modern form of economic imperialism. By pressuring global companies to invest in the United States, he aims to solidify the country’s position as the world’s dominant economic power.

In this climate, other nations must prepare for new challenges. Uncertainty will become the norm, and those who fail to adapt may struggle to survive in this shifting economic landscape. As such, brace yourselves for the years ahead—ones that promise to be filled with economic surprises.