Research by the Ghana International Trade and Finance Conference (GITFiC)
According to research conducted by Lead Researcher Isaac Osei Owusu of the Ghana International Trade and Finance Conference (GITFiC), the U.S. tariff war is disrupting global markets, affecting major economies such as Canada, Mexico, China, and Africa. With a 25% tariff increase on key imports from Canada and Mexico and a 10% tariff on Chinese imports, the economic fallout will lead to GDP declines, job losses, and significant disruptions in key industries, including agriculture and manufacturing. The Global Trade Battlefield: Who’s Most Affected?
The U.S. remains a trade giant, but its tariff policies are testing relationships with key partners. Let’s break down the numbers:
- Mexico:
- The U.S. is Mexico’s largest trading partner, with bilateral trade exceeding $800 billion annually.
- 80% of Mexico’s total exports go to the U.S., making it highly vulnerable.
- The new tariffs could slash Mexico’s GDP by 1%, hitting agriculture the hardest—exports of avocados and tomatoes could drop by 15%.
- In response, Mexico has retaliated with tariffs on U.S. agricultural goods, including pork, apples, and grapes.
- Canada:
- U.S.-Canada trade is valued at $683 billion, with 75% of Canadian exports heading south.
- Canada supplies the U.S. with vital energy resources, vehicles, and machinery.
- A 10% decline in lumber exports and disruptions in the automotive and agriculture sectors could cause Canada’s GDP to shrink by 0.5%.
- Prime Minister Justin Trudeau retaliated with $155 billion in tariffs on U.S. goods, targeting steel, aluminum, and food products.
- China:
- U.S.-China trade stood at $50.6 billion in November 2024, but tariffs are reshaping the flow of goods.
- China faces a 0.8% GDP decline, with its manufacturing sector bracing for a 20% drop in exports to the U.S.
- The trade war will scare off foreign investors, weakening China’s role as a global production hub.
Africa: Caught in the Crossfire or Finding Opportunity?
Africa’s direct exposure to U.S. tariffs is limited, but the ripple effects are undeniable:
✅ Winners:
- Kenya, Nigeria, Ethiopia, and Ghana could capitalize on export gaps that will be left by China, boosting sales of coffee, cocoa, and textiles.
❌ Losers:
- Countries reliant on raw material exports (like Nigeria and Angola) could face volatile commodity prices, leading to revenue losses.
Foreign Direct Investment (FDI) in Africa may drop, as global investors adopt a cautious stance amid uncertainty.
Who Takes the Hardest Hit? Mexico Tops the List
Of all affected economies, Mexico emerges as the most vulnerable:
- A 1% GDP contraction is expected due to trade reliance on the U.S.
- Retaliatory tariffs could worsen agricultural losses, affecting both Mexican farmers and American consumers.
The U.S. Isn’t Immune: Domestic Consequences
America’s economy isn’t escaping the fallout, either:
- Inflation Spike:
- Prices could rise by 1 percentage point, pushing inflation to 4% annually—double the Federal Reserve’s target.
- The cost of cars could jump by $3,000 due to expensive imported parts.
- Job Losses:
- The U.S. manufacturing sector could shed 30,000 jobs as export demand shrinks.
- Farmers are already feeling the pain, with $10 billion in export losses from China’s retaliatory tariffs.
GDP Slowdown:
The tariff war could slash U.S. GDP by 1.6% (or $467 billion).
NAFTA/USMCA at Risk: Is North America Splitting Apart?
- Tensions are mounting between the U.S., Canada, and Mexico, despite their commitments under the USMCA (formerly NAFTA).
- Canada and Mexico may seek alternative trade partners, weakening North America’s economic integration.
Final Thoughts: A Trade War with No Clear Winners
The Ghana International Trade and Finance Conference (GITFiC) research underscores a harsh reality: the tariff war is a lose-lose situation. While some African economies might find new export opportunities, the broader impact is one of economic instability, rising costs, and job losses across multiple continents.
As global trade shifts, one thing is clear—collaborative policies, not protectionism, will be key to future economic stability. To read the full research paper. Visit https://gitfic.com/
Research by: Issac Osei Owusu