What to expect in 2025

President Trump loves tariffs...

On January 20, investors will turn their attention to Washington, D.C., where Donald Trump will be inaugurated as the 47th US president. The new administration's trade policy will be crucial for its trading partners. During his election campaign, Trump repeatedly announced massive tariff increases, some of which were to come into force on the first day of his term of office. His trade policy is difficult to assess because he has made numerous and sometimes contradictory statements in recent months and has not provided any details, for example, on the groups of goods affected. The main trading partners can be divided into three groups:

The US has a free trade agreement with 20 countries. This group of countries accounts for around 38% of US imports. The most important of these are Mexico and Canada, with which the US is bound by the USMCA, the successor to NAFTA. Trump had just threatened Canada and Mexico with immediate tariffs of 25% (the effective tariff rate on imports from these countries is currently 0.2%). However, this threat is more likely to be seen as a lever for negotiations. The main aim is probably to improve border security in order to reduce illegal immigration into the US.
Around 13% of US imports currently come from China. The tariff has already been raised significantly since 2017 and currently stands at just under 11%. Trump has brought a further increase of 10% into play here, and has also mentioned 60%. Defensive measures against China enjoy broad bipartisan support; the Biden administration had maintained the Trump tariffs and even imposed further tariffs on some product groups. Even higher tariffs are very likely, although it is not entirely clear whether these will be imposed on all imports from China or only on goods important to security policy.
The EU currently accounts for around 19% of US imports and the effective tariff rate is 1.2%. However, only 33% of imports from the EU are currently subject to customs duties. At the end of March, an agreement between the EU and the Biden administration expires under which the tariffs imposed by Trump in 2018 on steel and aluminum from the EU (as well as the EU's retaliatory tariffs on motorcycles and whiskey) were temporarily suspended. Higher tariffs on a broad basis against the allied Europeans are much less likely than against China. But the EU itself tends towards protectionism and could rely too heavily on counter-tariffs instead of pragmatically reaching a deal with Trump.

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