By Joke Kujenya
TRADE TENSIONS between the United States and the rest of the world reached new heights this week following President Donald Trump’s sweeping tariff policies.
The impact of the US trade war is being felt across various sectors, with countries like China and Nigeria responding in distinct ways to the ongoing volatility.
While Trump’s tariffs have generated widespread market instability, certain nations, like Nigeria, have seen some temporary relief, while others, like China, have sharpened their retaliatory measures.
On Thursday, the Nigerian government announced that the naira gained ground against the US dollar, climbing from N1,629.93 to N1,605 at the official foreign exchange market.
This marked the highest appreciation seen this week, with analysts attributing the strengthening of the naira to Trump’s decision to pause planned tariff increases on nations excluding China.
The Naira’s brief recovery came as a result of this announcement, which gave the global market some breathing space, as informed by the country’s Minister of Finance, Wale Edun.
However, the Nigerian black market exchange rate remained stable at N1,620, suggesting that the official market movement did not fully translate to the informal market, which typically reacts more slowly to global events, the government notes.
Despite the temporary relief, the broader picture remains bleak as the impact of Trump’s tariff strategy continues to reverberate through the global economy.
Moreover, Trump’s decision to pause tariff hikes was not without controversy, particularly as it excluded China, the US’s largest trading partner.
This decision sent ripples across markets, where confidence remains fragile.
Trump’s tariffs, originally designed to reduce trade imbalances and force countries to open up their markets to US goods, have led to widespread market uncertainty, not just in the US, but also in other major economies.
In response, China has taken a hard stance, accusing the US of exacerbating global market instability. Following Trump’s announcement of the 90-day tariff pause for most nations, Beijing retaliated swiftly.
China increased its tariff on US goods to an eye-watering 125%, with immediate effect.
This escalation is the latest in a series of retaliatory measures that have now placed a heavy burden on American products sold to China.
The Chinese government has sharply criticized the US’s approach, describing Trump’s tariff policies as a “numbers game” with no real economic benefits.
In a strongly worded statement, China’s Ministry of Commerce said, “The United States’ imposition of round upon round of abnormally high tariffs on China has become a numbers game with no practical significance in economics.
“If the US continues to play the tariff numbers game, China will ignore it.” The ministry went on to state that the growing tariffs would not have any real impact on China’s market, as the demand for US goods in China is rapidly diminishing. China’s official stance is that it will not engage in any further tariff increases unless the US continues its aggressive policy.
Beijing’s retaliation, which now brings its tariff levels on US goods to 125%, has sparked anger in Washington, with the Trump administration standing by its stance.
The president has repeatedly defended his tariff strategy, claiming that the benefits of his economic policies would be realised in the long run.
However, Trump brushed aside the global market disruptions, stating, “In the end it’s going to be a beautiful thing.”
He has also dismissed concerns about the impact of tariffs, stating that such “transition costs” were simply a short-term challenge that would ultimately lead to a stronger US economy.
Trump’s decision to maintain high tariffs on China, even as he paused increases for other countries, has left many markets unsettled. The effects of these tariffs are being felt across the globe, with particular focus on Japan’s economy.
The Daiwa Institute of Research in Japan has estimated that Trump’s 24% reciprocal tariffs could lower the country’s GDP by 0.6% in 2025, following a mere 0.1% GDP growth in 2024.
The Japanese automotive industry, which is a major contributor to the country’s economy, is already seeing the negative effects of the US car tariff, which was imposed on Thursday. Analysts predict that this could cause severe disruption to Japan’s economic output.
Japan’s Nikkei stock market index has been particularly hard-hit by the tariffs, falling to an eight-month low on Thursday, wiping out over 18 trillion yen (approximately $127 billion) in market value.
The tariffs are expected to damage not only the automotive sector but also key supply chains that have global implications.
Japan’s auto industry, which contributes about 3% to the nation’s GDP, is facing a particularly difficult future as US tariffs on vehicles and auto parts continue to escalate.
Meanwhile, the European Union has been taking a cautious approach, watching the developments closely. Ursula von der Leyen, President of the European Commission, indicated that the EU is ready to strike back with countermeasures should the trade conflict worsen.
In an interview with the Financial Times, von der Leyen pointed out that the EU had a “wide range of countermeasures” at its disposal, particularly targeting US digital services.
The EU is considering levying tariffs on advertising revenue from US tech giants operating within the bloc.
This could have major implications for large US companies such as Google and Facebook.
French President Emmanuel Macron also voiced concerns over the escalating tariff war, urging the EU to remain strong and united in its response to Trump’s policies.
“With the European Commission, we must show ourselves as strong: Europe must continue to work on all the necessary countermeasures,” he said.
The EU’s potential retaliation could exacerbate the trade war, further straining international relations and economic stability.
As the US, China, Japan, and the European Union (EU) continue to manoeuvre in this complex web of trade tensions, other nations like Canada and Vietnam are attempting to take advantage of the situation.
Canada’s Prime Minister, Mark Carney, welcomed Trump’s pause on the tariff hikes, calling it a “welcome reprieve” for the Canadian economy. He confirmed that Canada would begin negotiations with the US on a new economic deal following their national elections on April 28.
Similarly, Vietnam has agreed to begin trade talks with the US, signalling that smaller nations are ready to capitalise on the global economic shifts.
As China continues to seek new allies to counterbalance the pressure from the US, President Xi Jinping is set to travel to Vietnam, Malaysia, and Cambodia next week, where trade issues are expected to dominate the agenda.
In the meantime, the world’s two largest economies, the US and China, seem locked in a full-blown trade war with no clear end in sight.
Despite the temporary relief brought by Trump’s tariff pause, market analysts are skeptical about the long-term effects of these policies.
With countries like China retaliating fiercely and Japan already feeling the pinch, global markets remain in a state of flux.
