By Stelios Fenekos
Below is an article written by Punit Oza, Founder & Director of Maritime NXT on the opening of the United Nations General Assembly (UNGA)
The Tariff Iceberg: Visible Impacts and Hidden Transformations of Trump's Trade Policy
by Punit Oza, FICS, AFNI, LLC, M.Sc.
President Donald Trump's return to the White House in 2025 has ushered in an unprecedented era of tariff policy that extends far beyond the visible price increases at checkout counters. Like an iceberg, where only 10% appears above water while 90% remains hidden beneath the surface, Trump's tariff regime presents obvious immediate effects while triggering profound structural changes in global trade flows that will reshape international commerce for decades to come.
The Visible Tip: Immediate Economic Impacts
The most apparent effects of Trump's tariff policies are those directly felt by American consumers and businesses. In 2025, Trump's tariffs are likely to increase federal tax revenues by $161 billion, or 0.53 percent of GDP, making the tariffs the largest tax hike since 1993. This massive revenue generation comes at a steep cost to American households, with the Trump tariffs amount to an average tax increase of nearly $1,300 - $2,400 per US household in 2025.
The tariff structure itself reveals the administration's strategic approach. Using his IEEPA authority, President Trump imposed a 10% tariff on all countries. This took effect April 5, 2025 at 12:01 a.m. EDT. President Trump has then imposed an individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits. These will come into effect on 07th August. This graduated approach has created varying impacts across different trading partners, with Canada has been slapped with a 35%, while Switzerland's rate is now 39%, while Taiwan faces a 20% duty. India's final tariff rate remains a mystery as a "penalty" for trading with Russia remains unquantified.
The burden of these tariffs falls primarily on American importers and consumers. Research indicates that Chinese exporters lowered pre-tariff prices by only 0.7% between January and April 2025 despite a 30% rise in duties, implying that almost the entire burden of the new tariffs had been passed on to US firms and consumers. This pattern demonstrates how tariffs function as a tax on domestic consumption rather than an effective tool for compelling foreign producers to absorb costs.
The Hidden Mass: Competitive Advantage Reshuffling
Beneath the surface of visible price increases lies a complex redistribution of competitive advantages across the global economy. Trump's selective tariff approach has inadvertently created winners and losers in ways that extend far beyond the intended targets. Countries not subject to the highest tariff rates suddenly find themselves with significant competitive advantages in the American market.
For instance, while China faces substantial tariffs, other Asian manufacturing hubs like Vietnam, Thailand and even India, for the time being, have seen their relative competitiveness improve dramatically. This shifting landscape has prompted multinational corporations to accelerate their supply chain diversification strategies, moving production away from high-tariff countries to those with more favorable trade treatment. The semiconductor industry exemplifies this trend, with companies rapidly establishing or expanding facilities in countries that maintain better access to the American market.
European nations, despite facing their own tariff challenges, have found opportunities in sectors where Chinese competition has been artificially constrained. German automotive manufacturers, for example, have gained market share in the American luxury car segment as Chinese electric vehicle imports face prohibitive tariffs. This competitive reshuffling extends beyond traditional manufacturing into high-technology sectors, where the tariff structure has created new geographic centers of innovation and production.
New Bargaining Arrangements: The Diplomacy of Trade
The tariff regime has fundamentally altered the landscape of international trade negotiations, creating new forms of economic diplomacy. Countries now engage in bilateral and multilateral discussions not merely about trade volumes or market access, but about securing preferential tariff treatment from the United States. This has led to a complex web of side agreements, economic partnerships, and strategic alliances designed to navigate the new tariff environment.
The most significant example of this new diplomatic dynamic emerged in the U.S.-China relationship, where the United States and China each lowered tariffs by 115% while retaining an additional 10% tariff. Other U.S. measures will remain in place. Both sides took these actions by May 14, 2025. This partial resolution demonstrates how tariffs have become bargaining chips in broader geopolitical negotiations, with trade policy serving as both carrot and stick in international relations.
Similarly, the temporary exemption granted to Mexico (in form of a delayed deadline) and Canada (in form of exemption on products covered under USMCA) from certain tariff measures illustrates how geographic proximity and existing trade relationships can be leveraged to secure preferential treatment. These arrangements have created a tiered system of market access, where countries compete not only on economic efficiency but also on political alignment and strategic value to the United States.
Market Access Revolution: Inverting Traditional Trade Flows
The tariff structure has catalyzed an unexpected transformation in how American goods access global markets. As other countries implement retaliatory measures, American exporters have found themselves facing new barriers abroad, prompting both government and private sector initiatives to develop alternative market strategies. At the same time, President Trump's trade deals have provided tariff-free market access to American agricultural products to Japan and European Union. Both these developments, positive and negative, will lead to the emergence of new trade corridors and the strengthening of previously marginal economic relationships.
American agricultural products, traditionally strong export performers, have had to find new markets as established buyers like China implement their own protective measures. This has accelerated the development of trade relationships with African and South American markets, regions that were previously secondary priorities for American exporters. The shift has required substantial investment in new distribution networks, marketing strategies, and product adaptation to meet different consumer preferences and regulatory requirements.
At the same time, American Rice exports into Japan will create huge opportunities for clean dry bulk carriers to carry such cargo from US West Coast into Japan, providing long haul employment, which did not exist previously, as Japanese economy did not allow Rice imports.
Manufacturing exports have undergone transformations too, with American companies increasingly focusing on markets where they maintain competitive advantages despite retaliatory tariffs. This has led to greater emphasis on high-value, specialized products where American technological superiority can overcome price disadvantages created by tariff wars.
Strategic Partnership Realignment: Bypassing America
One of the most profound hidden consequences of the tariff regime has been the acceleration of trade relationships that explicitly bypass the United States. Countries facing high American tariffs have intensified their economic cooperation with each other, creating alternative trade networks that reduce their dependence on the American market. This phenomenon represents a fundamental shift in global economic architecture, potentially diminishing America's role as the central hub of international commerce.
The ASEAN countries, for example, have deepened their economic integration partly as a response to American trade barriers. Similarly, the European Union has accelerated trade agreements with Asian and African partners, creating new economic blocs that operate independently of American influence. These developments suggest that the tariff policy may be achieving the opposite of its intended effect, potentially isolating the United States from global trade networks rather than compelling other countries to accept American terms.
Latin American countries have similarly intensified their trade relationships with Asia and Europe, reducing their traditional dependence on the North American market. This shift has been facilitated by improvements in logistics infrastructure and the development of new shipping routes that make trans-Pacific and trans-Atlantic trade more economically viable.
The Great Divide: Emerging Economic Camps
Perhaps the most significant long-term consequence of the tariff regime has been the emergence of distinct economic camps aligned either with or against American trade policy. This polarization extends beyond simple trade relationships to encompass technology standards, financial systems, and regulatory frameworks. Countries are increasingly forced to choose between maintaining close economic ties with the United States or pursuing deeper integration with alternative economic systems.
The pro-American camp includes traditional allies like the United Kingdom, Australia, and several Eastern European nations that have aligned their trade policies with American preferences in exchange for preferential treatment. These countries have adopted similar approaches to technology regulation, particularly regarding Chinese technology companies, and have coordinated their policies on issues ranging from data privacy to supply chain security.
Conversely, an increasingly coherent anti-American economic bloc has emerged, centered around countries that view American tariff policy as economically harmful and politically coercive. This group, which includes not only traditional rivals like China and Russia but also important partners like Brazil and India, has begun developing alternative economic institutions and standards. The emergence of alternative payment systems, technology standards, and trade agreements within this bloc represents a fundamental challenge to American economic hegemony.
Onshoring Revolution: Rebuilding American Manufacturing
The tariff policy has succeeded in one of its primary stated objectives: encouraging the return of manufacturing production to the United States. The White House argued the move would boost domestic manufacturing and generate $100 billion in tax revenue, noting that about 50% of the 16 million cars bought by Americans in 2024 were imported. This onshoring trend has accelerated across multiple industries, driven by the combination of tariff protection and growing concerns about supply chain resilience.
The automotive industry exemplifies this transformation, with Stellantis announced it would temporarily close factories in Canada and Mexico while simultaneously announcing plans for new American facilities. This pattern has been repeated across industries from electronics to pharmaceuticals, as companies seek to avoid tariff costs while positioning themselves closer to the American consumer market.
However, this onshoring process has revealed the complexity of modern manufacturing ecosystems. Many companies have discovered that rebuilding American production capacity requires not just new factories but entire supply chains, skilled workforces, and supporting infrastructure. The process has been more expensive and time-consuming than initially anticipated, leading to significant capital investments and, in many cases, higher production costs that are ultimately passed on to consumers.
The technological implications of onshoring extend beyond simple manufacturing relocation. Companies are investing heavily in automation and advanced manufacturing technologies to offset higher American labor costs. This has created opportunities for American technology companies while simultaneously raising questions about the employment benefits of returned manufacturing, as highly automated factories require fewer workers than their traditional counterparts.
Conclusion: Navigating the New Trade Reality
Trump's tariff policy represents more than a temporary shift in trade relations; it constitutes a fundamental restructuring of global economic relationships that will persist long after current policies change. The visible effects—higher prices, increased government revenue, and protected industries—are merely the surface manifestations of deeper transformations in competitive dynamics, diplomatic relationships, and economic alliances.
The success or failure of this policy cannot be measured solely by traditional metrics like trade balances or manufacturing employment. The true test lies in whether the United States can maintain its position as the central node of global commerce while simultaneously pursuing policies that encourage other countries to develop alternative economic networks. The early evidence suggests a mixed picture: while some manufacturing has indeed returned to American shores, the broader effect has been to accelerate the development of trade relationships that bypass American influence entirely.
As this new trade reality continues to evolve, policymakers, businesses, and consumers must grapple with the complex implications of a world where economic relationships are increasingly shaped by political considerations rather than pure market forces. The tariff iceberg continues to drift through global economic waters, its visible effects commanding attention while its hidden mass reshapes the fundamental currents of international commerce.
-----------------------------------------------------------------------
Mr. Punit Oza is the Executive Director at Singapore Chamber of Maritime Arbitration and has over 27 years of experience in Dry Bulk Shipping, holding senior management positions in some leading shipping and trading companies. Punit started his career in 1993 with Precious Shipping in Bangkok and then went on to work with Aries Shipbroking in Singapore, Astra Shipping in Dubai, Noble Chartering in Hong Kong and Torvald Klaveness in Singapore. Since January 2020, he has moved into the board of Klaveness Asia Pte Ltd as a non-executive director. Punit is also the Vice-Chairman of Singapore Branch of Institute of Chartered Shipbrokers.
Punit is a graduate in Financial Management and Accounting from University of Mumbai and a postgraduate in Shipping, Trade and Finance from CASS Business School, London. He also holds an LLB and Post Graduate Diploma in Maritime Law from University of London.