“MAYBE, the children will have two dolls instead of 30 dolls, you know,” he said, “and maybe the two dolls will cost a couple
of bucks more than they would
normally.” Jane Mayer, a reporter with The New Yorker, called it “Trump’s Marie Antoinette moment.”

With US President Donald Trump and his team of economic and trade advisers hogging the news daily with twists and turns on the implementation of the “most beautiful word” in Trump’s vocabulary, pundits around the world have begun to assess the impact
and the likely future consequences and repercussions.

Leading financial and economic institutions in the US and elsewhere unanimously agree that the tariff policies, even if moderated, pose a major threat to global economic growth and stability.

The IMF (International Monetary Fund) – citing trade disruptions, policy uncertainty, and retaliatory measures – has revised its global growth projection for 2025 to 2.8%, down from 3.3% in 2024. For 2026, it expects global growth to remain subdued at 3%, with risks tilted downward due to the prolonged trade tensions.

What is significant too is that it has increased the probability of a recession in the US to nearly 40%, higher than its forecast of 25% in October. J.P. Morgan Research estimates that Trump’s tariffs (10% universal tariff and 145% on China) could reduce global gross domestic product by 1% in 2025. This includes direct impacts and spillovers from financial market volatility and weakened business sentiment.

In a scenario with a reduced 60% China tariff, the drag could still reach 0.7 to 1%. Away from the calculus of pundits, Trump’s tariff war has real-life effects and begun to impact large groups in the US and China, with some sectors and population groups already significantly bearing the brunt.

A breakdown of the most adversely affected groups includes:

Groups in the US most adversely affected

Low-income and budget-conscious families

The elimination of the de minimis exemption (which allowed tariff-free imports under US$800 (RM3,376) disproportionately affects lower-income households and budget-conscious consumers who rely on goods from China and other developing countries for their household essentials, clothing, electronics and a wide range of products that are not available from US producers or are too expensive.

Small and medium-sized enterprises (SMEs)

SME dependent on imports, for example, toys, apparel, machinery and other manufacturers and retailers, face supply chain disruptions and skyrocketing costs. Many may go out of business as they lack the inventory buffers or pricing power of larger enterprises.

Agricultural exporters and the rural economy

The loss of Chinese markets for US farmers arising from China’s retaliatory tariffs targeting agricultural exports such as soybeans, pork and dairy is a big hit on the farming community and rural economies. During the first Trump administration, the two-year trade war between the US and China reduced American agricultural exports to China by an estimated US$25.7 billion. This time it could be even worse.

Automotive and manufacturing workers

Despite concessions made to US car manufacturers, the automotive industry and its associated products and services are still being hard hit since a significant portion of auto parts that are imported are subject to a 25% tariff. Meanwhile, General Motors has cut its profit forecast for 2025 by more than 20% and said the Trump administration’s tariffs would increase its costs by US$4 billion to US$5 billion this year. Motorists can also expect to pay more for repairs, insurance and practically every aspect of their future vehicle bill.

Port and logistics workers

Major ports (Los Angeles, Long Beach and Seattle) are reporting a 35% drop in cargo arrivals, leading to reduced hours and layoffs for dockworkers and truckers. United Parcel Service (UPS), one of the world’s largest shipping and logistics companies, has now announced that it will cut about 20,000 jobs in 2025 to reduce costs, citing changes in global trade “and new or increased tariffs”.

Groups in China most adversely affected

Export-dependent manufacturers

Industries such as home products, electronics, toys and furniture facing prohibitive tariffs (up to 145%), have begun factory closures. The Port of Los Angeles has reported a near-halt in shipments from China, signaling collapsing demand.

Workers in trade-dependent regions

Industrial hubs (for example, Guangdong and Zhejiang) face layoffs as US orders decline. Goldman Sachs estimates that up to 20 million Chinese workers – roughly 3% of China’s
labour force – are exposed to US-bound
exports if Trump’s 145% tariff on Chinese goods holds firm.

Small online sellers

The end of the de minimis provision will slash profitability for direct-to-consumer Chinese e-commerce platforms (for example, Shein, Temu and others) which have relied on tariff-free small packages for their sales.

Casualty count in Asean

Apart from China, other countries specially targeted by Trump’s tariff war include Asean member countries that have been beneficiaries of China’s investment diversification away from China as well as have been able to capture a share of the US market on their own strength.

Below is a breakdown of some key impacts of Trump’s tariff war in Asean:

Economic growth and export disruptions

Vietnam, Cambodia, Laos and Thailand face steep tariffs, threatening their export-driven growth models. Vietnam, for instance, exports goods worth 30% of its GDP to the US, primarily electronics and garment sectors.

GDP contraction risk

Analysts estimate Trump’s tariffs could cut regional growth by 0.5 percentage points in 2025, with Vietnam and Cambodia at risk of losing 5.5% and 3% of GDP, respectively.

Supply chain disruptions

Asean nations serving as hubs for Chinese firms rerouting goods to avoid US tariffs, for example, solar panels manufactured in Malaysia and Vietnam, will see their exports disrupted and reduced.

Social and labour market consequences

Job losses in industries such as textiles (Indonesia), electronics (Malaysia) and steel (Thailand) could shed many thousands of jobs. The ripple effects of reduced export earnings will bring higher inflation levels and worsen living standards.

Although less developed countries of the region will be hit the hardest, for now, it is telling that no Asean member nation has yet to bend its knee, clearly showing that the American bully and scare tactics do not have the hyped-up and oversized effect that the Trump administration has been expecting.

Main casualty

Much more significant than the economic losses and casualty count are not only the lost jobs
and reduced incomes, including those lost in the US itself, it is the damage to US credibility and leadership in the global economic and geopolitical arenas.

This impact highlights the cascading effects of Trump’s tariffs, which extend beyond economic metrics to key aspects of the international order, such as geopolitical alliances, soft power standing, popular opinion, mindsets and a host of interrelated aspects crucial to the US standing in the Asian region and elsewhere in the world. Even if Trump back-pedals on his tariffs, the US has already lost so much international goodwill and respect that it will take many years to repair the damage.

Lim Teck Ghee’s Another Take is aimed at demystifying social orthodoxy. Comments: [email protected]