‘Dangerous game of chicken’: Trump prepping new tariffs, threatening the global economy

Former President Donald Trump's recent moves to impose new tariffs are sending shockwaves through the global economy, creating an atmosphere of uncertainty and fear. The tariffs, which are primarily targeting Canada, Mexico, and China, have sparked concerns from economists, trade analysts, and political leaders who warn that this could lead to a "dangerous game of chicken" with far-reaching consequences for international trade and economic stability.

The New Tariffs and Their Impact

On February 1, 2025, Trump announced a series of significant new tariffs, including a 25% tariff on imports from Canada and Mexico, with Canadian energy imports facing a reduced 10% levy. Furthermore, a 20% tariff was imposed on all imports from China. These measures, which Trump framed as necessary to tackle illegal immigration and drug trafficking, have been met with strong opposition from trade partners and global economic bodies.

Trump has justified the tariffs by stating that they are a means of holding foreign nations accountable for their failure to curb illegal activities that affect the U.S. However, critics argue that these tariffs are less about security and more about exacerbating trade tensions, undermining global economic stability. The imposition of such tariffs risks inflaming already strained relationships with key U.S. trade partners.

Global Economic Concerns

The new tariffs have raised alarm bells across the global economic community. The Organisation for Economic Co-operation and Development (OECD) has already downgraded growth forecasts for the U.S., Canada, and Mexico due to these escalating trade tensions. According to the OECD, the tariffs are contributing to a broader slowdown in global growth and fueling inflation. The organization has warned that the global economy is facing a period of uncertainty, as nations adjust to unpredictable trade policies and the potential for retaliatory tariffs.

The ongoing trade wars have disrupted established supply chains, leading to higher costs for businesses and consumers. With the U.S. imposing tariffs on essential imports, industries that rely on cross-border trade, such as manufacturing and agriculture, are particularly vulnerable. These tariffs increase the cost of production and create bottlenecks in the supply chain, which could ultimately lead to higher prices for goods and services, further intensifying inflationary pressures.

Retaliatory Measures and Escalating Tensions

As expected, these tariffs have prompted retaliatory actions from affected countries. Canada, for instance, announced that it would impose counter-tariffs on U.S. goods worth approximately CAD 155 billion. These countermeasures are designed to protect Canadian industries and mitigate the economic damage caused by U.S. tariffs. However, such retaliatory actions only serve to escalate the trade war, creating a tit-for-tat cycle that could spiral out of control.

In addition to retaliatory tariffs, there are growing concerns that these trade tensions could extend to other areas of international relations. If the trade war deepens, countries may begin to impose non-tariff barriers, such as quotas or restrictions on foreign investment, which could further destabilize the global trading system.

The Danger of a "Game of Chicken"

Economists are warning that the ongoing trade war between the U.S. and its key partners is a dangerous game of chicken. In this context, the “game” refers to a high-stakes situation in which countries are unwilling to back down, potentially triggering a broader global economic crisis. The uncertainty surrounding trade policies is already deterring investment and disrupting markets, making it more difficult for businesses to plan and make long-term decisions.

The biggest risk in this scenario is the damage to global economic confidence. As tariffs rise and trade partners retaliate, the fear is that the world could enter a prolonged period of economic instability, marked by rising inflation, higher consumer costs, and diminished growth. Global financial markets, which thrive on predictability and stability, could be thrown into turmoil, and the resulting effects could be felt far beyond the U.S., Canada, and Mexico.

Conclusion

Trump’s new tariffs are a high-risk strategy that could lead to a damaging trade conflict with serious global repercussions. The international community, including policymakers, economists, and business leaders, will be watching closely to see whether these tariffs trigger an escalating trade war or if diplomatic efforts can diffuse the tension. The stakes are incredibly high, and the outcome of this "game of chicken" could shape the future of global trade and economic relations for years to come.