[Typography art resembling Donald Trump’s portrait, Photo Credit to Pixabay]

The U.S. government escalated a global trade war this week through the imposition of new tariffs on imports from Canada, Mexico, and China.

Experts warn these aggressive measures could destabilize economies worldwide,  triggering a severe downturn.

On March 4, 2025, the International Chamber of Commerce (ICC) issued a stark warning: the world could face a crisis as severe as the Great Depression if tariffs continue to rise unchecked.

President Trump campaigned on protecting U.S. manufacturers by restricting foreign imports. 

His administration raised tariffs to 25%, targeting key trade partners. 

While the policy aims to reduce trade deficits, it  risks severe economic fallout.

Canada swiftly retaliated, announcing $100 billion in retaliatory tariffs within 21 days.

China responded by imposing up to 15% tariffs on U.S. agricultural exports, including chicken, pork, soy, and beef. 

China further added 15 more U.S. companies to its list, banning them from exports, imports, and investments in China.

Mexico has also announced new plans to impose tariffs on U.S. goods.

Mexican President Claudia Sheinbaum condemned the U.S. tariffs as "unjustified and unilateral." 

She announced retaliatory trade measures, including tariffs and non-tariff restrictions, with details to be revealed on March 9. 

While she criticized Trump's decision, she also emphasized Mexico’s commitment to negotiations rather than escalating a trade war, warning of economic harm to both nations.

Canadian Prime Minister Justin Trudeau denounced the U.S. tariffs as  reckless and unjustified. 

He announced plans to challenge them through the World Trade Organization (WTO) and USMCA. 

In response, Canada imposed 25% retaliatory tariffs on $155 billion worth of U.S. goods, vowing to maintain them until the U.S. reverses its decision.

The ICC describes  the situation as a “coin flip” and warns that if trade tensions persist, global supply chains could collapse.

The stock market fell sharply after the U.S. implemented its tariffs on March 4, 2025.

The S&P 500 dropped 1.2%, while the Nasdaq briefly entered correction territory, down nearly 10% from its recent peak. 

Major U.S. companies reliant on trade suffered, with  Ford, General Motors, and Tesla, experiencing sharp declines. 

Airlines also took a hard hit, with United Airlines falling 5.8% and Delta dropping 6.4%. 

European markets suffered as well, with Germany’s DAX falling 3.5%. 

Amid the uncertainty, investors flocked to government bonds, leading to a drop in Treasury yields. 

Economists warn that if the trade war continues, central banks may need to step in to stabilize global markets.

The Federal Reserve now faces pressure to cut interest rates, though higher tariffs could fuel inflation, limiting its options.

History serves as a stark warning. 

In the 1930s, the Smoot-Hawley Tariff Act triggered worldwide retaliation, slashing global trade. 

Industrial production collapsed, and unemployment skyrocketed. 

The global economy now stands at a crossroads. 

Whether the U.S. modifies its approach or continues on its current trajectory will determine if this crisis spirals into another economic disaster.