Will global markets return to their initial balance?

The tariff policies of the U.S. President have generated crises and unpredictable turbulence in capital markets across the globe. From the Bombay Stock Exchange to Shanghai and even Wall Street, all have been impacted by this uneven tariff war and its consequences. Yet, the emerging signs of Trump’s relative failure in achieving his objectives have enabled markets and consumers to adapt more effectively to this reality.

In January 2025, with Donald Trump’s return to the White House, a wave of foreign and trade policy changes swept through the international system. One of the most prominent shifts was the declaration of an all-out “tariff war”—a policy that spared neither America’s long-time allies nor its strategic trade partners. These measures, aimed at “restoring America’s greatness” and addressing its trade deficit, promised fundamental changes in global economic relations.

However, eight months into this tariff battle, the White House appears to have fallen short of its ambitious goals. The key question is: why has this strategy, despite its initial assertiveness, faced such significant resistance from major global economic players—well beyond the European Union? Nations like India, China, Russia, and even close neighbors such as Canada have not bowed to Washington’s demands.

The most immediate and visible response to U.S. tariffs came in the form of reciprocal measures. As Washington raised duties on imports, many countries retaliated by imposing tariffs on American goods. This cycle of action and counteraction—dubbed the “tariff war”—ultimately harmed all sides. Consumers faced rising prices, exporters saw their sales decline, and engines of economic growth slowed in many countries, including the U.S. itself.

Another crucial factor lies in the interconnected and complex nature of today’s global economy. Many final products are assembled from components manufactured in multiple countries. A sudden tariff on a critical part could inadvertently harm industries heavily reliant on it—including those within the U.S. Such complexity turned tariffs into a double-edged sword, capable of cutting into America’s own economic base.

The reality is that America’s trade challenges run deeper than foreign tariffs. High production costs at home, differences in labor laws and environmental regulations, and massive investments in R&D by rival nations have all shaped the competitiveness of U.S. industries on the global stage. Tariffs, as a short-term policy instrument, were incapable of resolving these long-term structural issues. As a result, many sectors of the U.S. economy—especially agriculture, which depends heavily on export markets—suffered losses, and the policy faced mounting domestic opposition.

One of the most vital elements of the global economy is stability and predictability. The Trump administration’s tariff policies, often announced suddenly and without prior coordination, created widespread uncertainty in financial and industrial markets both in the U.S. and internationally. This environment discouraged long-term planning and new investments. Companies, to survive and grow, require stability—something these policies failed to provide.

In the end, while Trump managed to secure limited concessions from some trade partners—such as deals with Mexico and the EU—the tariff war largely failed to achieve his ambitious goals and produced unintended economic consequences. This experience once again demonstrated that in today’s complex world, one-dimensional tools like tariffs rarely solve deep, multi-faceted trade problems. More often, they escalate tensions and damage the economic interests of all parties involved.