Last week, former president Donald Trump was reelected to serve as the nation’s chief executive. The republican party, which nominated Trump, also secured a majority in the Senate and, although votes are still being counted, is close to a similar hold of the House. With all likelihood, Trump will enter the presidency with a large degree of power. One that will easily reshape the global economy.

Most importantly, the former president is almost certainly changing the norms of global trade as he hinted multiple times across the campaign trail. In particular, it seems to be the end of a U.S.-led policy of free trade as Trump argues for a number of trade barriers to limit commerce and, in theory, bolster the U.S. economy.

Earlier this year, we did an initial analysis of a number of policies proposed by Trump throughout the campaign trail. Now that his second term is a fact, we wanted to return to the data and better estimate how the Trump presidency is likely to reshape global trade across the world. 

Let’s start with the most evident point. The second Trump will be one of tariffs. Of many tariffs at that—namely, of a fixed tax on imports to be paid when goods enter the U.S. market. Time and time again, the former president argued for the creation of a blanket tariff of 10% for all countries exporting to the U.S. and a tariff of 60% just for Chinese imports. Recently, he went further and argued for a 25% tariff on Mexican imports until the Mexican government is able to control rising immigration at the U.S.-Mexico border and reduce the impact of cartel violence. 

President Trump sees such tariffs as a twofold tool. On the one hand, it is an essential policy to reaffirm U.S. power abroad by restricting access to the U.S. economy—still, by far, the largest on the planet. On the other hand, and equally as important, they are a means to restructure U.S. manufacturing to become less reliant on foreign actors.

There is a great amount of evidence for this latter point. Over the last 25 years, the U.S. trade deficit has grown drastically. In 1999, the U.S. ran a deficit of $259.5 bn—meaning, it imported $259.5 bn worth of goods more than it exported. By 2023, the deficit had grown to $971.1 bn. That is, as the graph below shows, an increase of the deficit of 274%.

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Something similar happens when looking at the top trade partners of the U.S. In the graph below, we plotted the trade deficit held by the U.S. with its 15 largest trade patterns and the rest of the world. For context, these 15 countries alone account for over 78% of all imports and 73% of all commerce performed by the U.S. As the graph shows, the U.S. runs deficits with 14 of its 15 largest trade partners. China, and Mexico are on top of the path, with a shared trade imbalance that accounts for 40.6% of the total deficit of the U.S.—no surprise that president Trump has argued for specific tariffs to both countries.

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The problem with tariffs is that, by and large, they function as a tax on consumers. Companies, naturally, will deal with tariffs by increasing the price of products being brought into the country. In the short term, before domestic alternatives arise, consumers will see an increase in costs. In fact, it is estimated that the tariffs applied by president Trump in his first term resulted in an increase of $831 in costs to the average U.S. household.

Now, based on Trump’s most recent promises to increase tariffs, we wanted to estimate the impact such policies would have on the U.S. economy. To do so, we looked at the imports from the 15 largest trade partners to the U.S. and the aggregate for the rest of the world.Our estimates of the tariff cost to each country are shown in the graph below.  In all, we found that Trump’s proposed tariff plan would result in price distortions of $592.74 bn—a considerable amount but still small compared to the $4.9 trillion the country gets from tax revenues. By far, China would be the country most impacted with tariffs of over $256 bn, followed by Mexico with $118.8 bn. This means that China alone would account for 43.21% of tariff revenues generated by the Trump proposal. 

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Not surprisingly, given these policies, The Economist recently placed Mexico and China amongst the countries most likely to be impacted by a second Trump term. In all, the publication released a “Trump Risk Index” that evaluates a country’s reliance on the U.S. in terms of trade, security, and immigration to deliver an overall risk score. Mexico led the index with a score of 77.4 points out of a possible 100. China came in sixth with a score of 50.4, although it is worth noting that the country had the second highest score in terms of trade as shown in the graph below:

All this together suggests that the global economy is likely to be restructured under a second Trump term. For years, the world lived through an era of open borders and ever decreasing trade restrictions. Now, barriers to international commerce promise to become an ever more present part of politics. 

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We believe companies should have full visibility as to how these policies could impact their supply chain. That is why we are building a copilot to your logistics operations, using AI to extract information from relevant communication channels and updating information on your shipments with real time data of disruptions from natural disasters, to policy changes like those in this article. If you’d like to learn more, make sure to schedule a demo of our product.