【Text by Observers Network, Chen Sijia】"Trump's tariffs are changing supply chains and diplomatic relations." According to a July 20 report by The Washington Post, as the tariff negotiation deadline set by US President Trump approaches, many of America's trade partners are trying to develop trade relationships that can bypass the US market, and a "global trade environment outside the US" is gradually taking shape.

The report states that Trump's trade policies have made business leaders uneasy. Data from Capital Economics shows that after the Trump administration introduced a series of tariff policies targeting specific industries and products, the average tariff rate on imported goods in the US has risen from slightly above 2% in January to about 15%, which is the highest level since the 1940s.

If some countries fail to reach a tariff agreement with the US before the August 1 deadline, the tariff rates may rise further. Although the scale of the new US tariffs has not been determined, it is generally expected that the tariff rates will be much higher than in recent decades.

Trump's tariff policy has already caused losses for many American companies. This month, executives at Conagra Foods, an American food giant, told investors that tariffs on tin-plated steel sheets have increased production costs, and the company plans to raise prices on canned foods. Sports equipment giant Nike is reviewing its operations, seeking cost savings, and plans to implement a "targeted price increase" this autumn.

Tariffs have also forced industry distribution giant Fasano to split imported goods, sending them in batches to Canada and the US separately. Compared to the previous unified North American supply method, this approach has created a "costlier supply chain."

Los Angeles Port, California, USA - Visual China

Alan Wolff, former Deputy Director-General of the World Trade Organization (WTO), said: "The US is no longer seen as a leader of the world trade system; it has withdrawn. It will do what it wants, make its own deals, and not consider past obligations. This is a fundamental change."

The Washington Post pointed out that tariffs have become Trump's "signature policy tool," reshaping the economies of developing countries, preventing the Federal Reserve from cutting interest rates, and disrupting the political situations of countries like Canada. Tariff policies have also caused some unexpected effects, such as the US now relying more on Russia's urea, which is a common fertilizer for crops like wheat, corn, and rice.

The Trump administration is defending its tariff policy and refuses to acknowledge that tariffs could have negative impacts on the US economy. Data released by the US Department of Labor last week showed that the US consumer price index (CPI) rose 0.3% month-on-month and 2.7% year-on-year in June. Due to the growth of inflation being lower than market expectations, US Treasury Secretary Bassett has announced a "victory" on social media.

However, economists at Goldman Sachs point out that it is still too early to assess the impact of tariffs on the US economy. After Trump threatened to impose more tariffs, many companies have chosen to stockpile goods before the deadline for raising tariffs, and they may need several more months before running out of these inventories.

Although the Trump administration hopes that tariffs will promote manufacturing back to the US, according to data from the US Census Bureau, the large increase in new factory investment during the previous presidency of Biden has seen a decline for five months in the past six months. Since Trump returned to the White House, the number of manufacturing jobs in the US has slightly declined, and output growth has been less than 2%.

Under the stimulus of Trump's "unpredictable demands," an increasing number of countries are trying to develop trade relationships that can bypass the US market, including the US' European allies.

Sebastien Breteau, CEO of quality inspection and compliance service provider QIMA, said that Chinese factories are strengthening their connections with European customers. He revealed that in the second quarter of this year, the demand from European companies for audits or inspections of potential Chinese suppliers increased by 5%, while orders from American buyers decreased by 24%.

At the same time, European countries are trying to strengthen their links with other markets to compensate for the losses caused by the decline in trade with the US. In April this year, the EU launched free trade agreement negotiations with the United Arab Emirates. On July 2, the Argentine Ministry of Foreign Affairs issued a statement announcing that Argentina, Brazil and other founding signatories of the Southern Common Market completed free trade agreement negotiations with members of the European Free Trade Association such as Switzerland and Norway, and the agreement will be signed in the coming months.

Breteau said directly: "In addition to the US, a global trade environment is forming."

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