Tariff tensions ripple across global economy

The United States' increasing use of tariff barriers is triggering significant economic turmoil around the world, particularly in sectors directly tied to manufacturing and physical goods, such as retail and industrial materials.

These industries are facing escalating production costs, which not only suppress consumer demand but also reduce corporate profits, creating a dangerous cycle - exacerbating unemployment risks and hindering global economic growth.

Additionally, countermeasures taken by other countries are also affecting U.S. businesses, with some sectors seeing negative consequences. Agriculture is a prime example.

U.S. agricultural exports support a wide array of domestic industries. According to the USDA Foreign Agricultural Service, for every dollar's worth of agricultural goods exported, U.S. domestic economic activity increases by $2.09.

In 2022, U.S. agricultural exports totaled $197.4 billion, supporting 1.25 million jobs across the country. The non-agricultural sectors benefited the most, with approximately 773,900 jobs supported, while 477,200 jobs were directly linked to agricultural production.

Caleb Ragland, a corn and soybean producer from Kentucky and the president of the American Soybean Association, warned that as 50 percent of U.S.-produced soybeans are intended for export, soybean farmers will face serious financial strain if market conditions do not improve by the fall harvest.

Meanwhile, the U.S. floral industry is also feeling the pressure. Around 80 percent of flowers sold in the U.S. are imported, and the government's tariff policies are driving up costs. Florists are growing increasingly concerned, as both they and their customers face higher prices. A flower wholesaler told CMG that their flowers come from countries such as Ecuador, Colombia, Canada, Thailand and the Netherlands. Tariff hikes are driving up the price of flowers, forcing them into a difficult situation.

The impact extends beyond U.S. borders, affecting global economies as well.

Hyundai Motor Group, South Korea's largest automotive exporter to the U.S., had announced a $21 billion investment in the U.S. over the next four years before Trump's tariff hikes, which includes $5.8 billion from Hyundai Steel to build a new plant in Louisiana.

However, the tariff hikes have raised concerns among Hyundai's employees and investors. The company has entered "emergency management" mode, implementing cost-cutting measures such as executive pay reductions and plant downsizing. A Hyundai Steel factory in Incheon has suspended operations for a month and launched a voluntary retirement program to reduce its workforce.

Now, industry analysts warn that Hyundai's investment plan in the U.S. may place even more financial strain on Hyundai Steel. Since the announcement of the investment, Hyundai Steel's stock has dropped by 22 percent, while the stock of Hyundai Motor Group has fallen by 12 percent.

In Germany, the engineering machinery sector is similarly feeling the effects of U.S. tariffs. The German Engineering Federation has issued a warning that the widespread punitive tariffs imposed by the Trump administration are causing significant damage on both sides of the Atlantic. These measures are not only failing to resolve trade issues but are also likely to trigger a spiral of retaliatory actions.

Germany has long been a key partner to U.S. manufacturing, particularly in high-tech areas, and the disruption of this trade relationship threatens to undermine both German exports and the U.S.'s ability to upgrade its own industries.

In Canada, concerns are mounting as much of the country's exports are directed to the U.S. Officials have predicted that a 25 percent tariff could result in the loss of up to one million jobs in key sectors such as automotive, lumber and dairy.

For example, according to the Canadian Broadcasting Corporation, the U.S. currently relies on Canadian lumber for 30 percent of its housing construction needs. If tariffs rise, this supply chain could face serious challenges, especially since domestic U.S. lumber production is unlikely to meet demand in the short term.

Trump's tariff threats, combined with his repeated calls for Canada to become the U.S.'s 51st state, have sparked a grassroots movement in Canada to boycott U.S. goods. The sentiment has had a tangible impact, with leisure travel to the U.S. dropping by 40 percent compared to last year. In 2024 alone, Canadians spent $20.5 billion on tourism in the U.S.

At a G7 meeting in Washington, Canadian Finance Minister Francois-Philippe Champagne said that Canada must fight against U.S. tariffs that affect a large portion of Canadian exports. He also warned that the tariffs would lead to inflation and hinder global economic growth.

Kristalina Georgieva, managing director of the International Monetary Fund, also expressed concern on Thursday that the shift in U.S. trade policy has led to a sharp increase in uncertainty. She called on countries to engage in constructive cooperation and resolve trade disputes promptly.

"Simply put, the world economy is facing a new and major test, and it faces it with policy buffers depleted by the shocks of recent years," she said, adding that "All countries should seize this moment to lower their trade barriers, both tariff and non-tariff."