Trump’s tariffs on China reignite trade war fears: the impact on global supply chains

President Trumps escalating trade war puts further pressure on already strained supply chains

The United States has imposed a 10% tariff on all Chinese imports, reigniting trade war tensions and prompting swift retaliation from Beijing. With the European Union, Canada, and Mexico also facing potential tariffs in the coming weeks, global supply chains are bracing for disruption.

The role of tariffs in trade policy

Tariffs are taxes on imported goods, typically calculated as a percentage of the item’s value. For instance, under the new US tariffs, a $5 product imported from China would incur an additional $0.50 charge. The US government aims to make imported goods less attractive to consumers, encouraging domestic purchases to boost the national economy, protect jobs, and increase tax revenues.

Trump’s influence on trade policy

Donald Trump, whose presidency was marked by aggressive trade policies, first introduced sweeping tariffs on Chinese goods in 2018. His administration framed these measures as a way to reduce America’s trade deficit and bring manufacturing jobs back to the US. Although the Biden administration has taken a more diplomatic approach, key elements of Trump’s protectionist policies remain in place. The latest tariffs suggest a continuation of this strategy, signaling further volatility in global trade relations.

What this means for global supply chains

Jackson Wood, Director of Industry Strategy, Global Trade Intelligence at Descartes, highlights the ongoing volatility that has plagued global trade since the COVID-19 pandemic. “From product shortages, congested shipping lanes, and military conflicts to political upheaval and environmental disasters, supply chains have been tested to the limit for the past five years.”

Wood stresses the importance of resilience in the face of protectionist policies. “Companies that have prioritised adaptability by diversifying supplier relationships, exploring alternative trade lanes, and leveraging trade instruments such as Foreign Trade Zones and Free Trade Agreements will be in a stronger position to navigate these challenges.”

Impact on food supply chains

The food and beverage industry, already under pressure from inflation and regulatory shifts, may face rising costs and logistical bottlenecks as tariffs disrupt established trade routes. If China retaliates with its own import restrictions, US exporters—particularly in the agricultural sector—could experience decreased demand, further exacerbating supply chain instability.

With trade tensions escalating, businesses will need to monitor developments closely and adapt their sourcing and distribution strategies. The coming months will be crucial in determining the long-term effects of these tariffs on global food supply networks.