Donald Trump has announced plans to impose a 10% tariff on Chinese imports starting February 1, while also considering levies on goods from the European Union (EU). These moves are part of his renewed “America First” trade policy, aiming to address trade imbalances and international disputes. The announcement has already impacted global markets, with Chinese stocks and the yuan experiencing significant declines.
Trade Tensions with China and the EU
During an event at the White House, Trump justified the proposed tariffs on Chinese goods, citing concerns about fentanyl shipments to Mexico and Canada. He further criticized the EU for its trade practices, stating that the US faces a $350 billion trade deficit with the bloc. Trump warned that the EU would also face tariffs if these issues remain unresolved.
In addition to targeting China and the EU, Trump reiterated his plans to introduce 25% tariffs on imports from Mexico and Canada, the US’s largest trading partners. While the 10% tariff on Chinese goods is lower than the 60% he mentioned during his campaign, the announcement has already shaken investor confidence in Asian markets.
Market Reactions
Chinese markets reacted sharply to the news. The CSI 300 and Shanghai Composite indices dropped nearly 1%, marking their biggest fall in two weeks. Hong Kong’s Hang Seng index closed 1.8% lower. The offshore yuan also declined against the US dollar, reflecting growing uncertainty.
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Policy Reversals and Infrastructure Changes
Alongside trade announcements, Trump signed executive orders reversing several Biden-era policies. One key order, called “Unleashing American Energy,” paused disbursements for green infrastructure and energy projects. This action puts $300 billion in funding at risk, including nearly $50 billion in Department of Energy loans and $280 billion in pending loan requests.
These funds were allocated under the Inflation Reduction Act and the bipartisan infrastructure law passed during Biden’s administration. The freeze has raised concerns among US investors about the future of renewable energy and infrastructure development.
Tax Policies and Global Implications
Trump also threatened to double taxes on foreign nationals and overseas companies in response to “discriminatory” taxes imposed on US firms abroad. He dismissed the global corporate tax deal negotiated by the Biden administration, stating that the OECD’s global minimum corporate tax rate of 15% would not apply to the US. This move could lead to global tensions over tax policies.
Major AI Infrastructure Project
Amid trade tensions and policy shifts, Trump unveiled a $500 billion joint venture, Stargate, involving OpenAI, Oracle, and SoftBank. The initiative aims to create a vast network of data centers across the US to support artificial intelligence development. Trump described the project as the largest AI infrastructure initiative in history, highlighting its importance to America’s technological leadership.
Broader Impact of Initial Moves
Trump’s early actions, including a freeze on diversity office operations and sweeping policy changes, signal a dramatic shift in US domestic and international strategies. These decisions are likely to have lasting effects on trade relations, economic policy, and global diplomacy.
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