Donald Trump’s second term in office began with the kind of shock that grabs headlines and shakes markets.
Within weeks, he rolled out a blanket tariff plan on almost everything the United States imports, setting the ground for a trade war against multiple allies.
The decision was pitched as a national reset that would fix a broken trade system.
But it set off a chain of reactions in China, Brazil, India and Canada that have left Washington with higher prices at home and strained ties abroad.
The White House argues the strategy is working. But does the data agree?
The China squeeze: did the chip crackdown overshoot?
The centrepiece of Trump’s pressure campaign is, of course, China.
The administration tightened controls on advanced semiconductors, pushed Nvidia’s China-oriented H20 chip off the market for several months and rolled out a licensing plan that forces Nvidia and AMD to hand over a slice of their China revenue.
The idea was that if China could not buy the hardware needed for artificial intelligence, the US would slow the rise of a rival.
The effect on China so far has been mixed. US restrictions did limit China’s access to top-tier chips and forced its tech sector to hunt for domestic alternatives.
But Beijing countered quickly. Regulators discouraged or outright banned major Chinese tech firms and state-funded data centres from buying Nvidia AI chips.
Data-centre operators showcased racks filled with homegrown accelerators.
The impact on Nvidia was also hard to ignore. China provided up to a quarter of the company’s data-centre revenue.
Losing that market weakened investor confidence and added volatility to a stock that had come to symbolise the AI boom.
Nvidia still posts enormous growth, but analysts now treat China as permanently lost ground.
The administration framed this as the price of protecting national security. But investors saw it as policy whiplash that created avoidable damage.
The Chinese government went further by adding fresh duties on US farm goods and threatening rare-earth supplies.
Farmers again paid for the fallout. China cut back on American soybean purchases, exactly as it did in the 2018-19 trade war.
US soybean exports then fell by more than two-thirds, and Beijing turned to Brazil and Argentina.
Trump later announced a new soybean package that sends shipments back toward pre-trade war levels, though China’s broader transition toward South American suppliers will not reverse.
Source: Bloomberg
Brazil’s dominance is stronger. China’s inventories are higher. And purchases tied to political deals come in short bursts that lift US futures above Brazilian prices, pushing most of the “normal” global business to South America.
The hard truth is that Trump has hard-coded his political story around numbers that China has deliberately kept soft.
Brazil: tariffs as punishment and the high price of a climbdown
Trump’s move against Brazil was even more surprising. In July, he imposed an extraordinary 40% duty on Brazilian food products.
The order cited political concerns around Brazil’s handling of the Bolsonaro case and alleged pressure on American tech companies.
The decision looked like an attempt to use trade as a stick in a domestic political fight.
The consequences were immediate. Importers warned that food prices would rise.
Coffee companies reported supply strain. Inflation data started to reflect the pressure.
Brazil pushed back and leaned harder into its ties with China and the wider BRICS bloc.
The tariff became an example foreign governments used to support the idea that US policies had become unpredictable.
Now, Trump on Thursday lifted the 40% tariffs on Brazilian food products — including beef, coffee, cocoa and fruit — that had been imposed in July in response to the prosecution of former Brazilian president and Trump ally Jair Bolsonaro.
The decision follows a similar move last week to remove tariffs on a range of agricultural goods from other countries, marking a reversal of measures that had contributed to higher food costs in the United States.
According to the order released by the White House, the change applies to Brazilian imports entering the US on or after November 13 and may require refunds of duties collected while the tariffs were in effect.
India: from strategic partner to collateral damage
India was once held up in Washington as the democratic counterweight to China, but Trump’s second term disrupted that narrative.
He placed heavy duties on a wide range of Indian exports and linked them to India’s purchases of discounted Russian oil.
That oil accounted for roughly 40% of India’s crude imports in mid-2025.
New tariffs raised the cost of goods from apparel to machinery and hit sectors where India had only recently gained a foothold in the American market.
New visa fees added to the tension. A $100,000 charge on each H-1B visa placed pressure on Indian tech workers and sent a message that the US was turning inward.
India responded by accelerating trade diversification and reaffirming its ties with BRICS partners.
The fallout is visible in the numbers. India’s merchandise trade deficit has widened to a record level, with US-bound exports down almost 9% and container volumes to American ports collapsing by more than 18% year on year.
Source: FT
India can absorb economic hits because its growth relies more on domestic demand than exports to the US.
But perhaps India now considers America unreliable. When countries start building their long-term playbook around the expectation of US volatility, the immediate tariff revenue looks far less important.
Canada: a breakdown no one expected
Perhaps the deepest rupture is the US relationship with Canada. That’s because more than 70% of Canadian exports flow south.
Trump imposed tariffs on Canadian metals, raised them again, and threatened duties on dairy and lumber.
Canada retaliated with billions in tariffs of its own. Supply chains that had operated smoothly for decades suddenly faced new costs.
The political impact has been intense. Polls show Canadian approval of US leadership near historic lows.
Source: Pew Research Center
Mark Carney’s government, which had hoped to stabilise relations, has been forced to develop contingency plans for industries most exposed to US trade swings.
Even as Ottawa lifted some retaliatory duties, it kept others in place to guard against further action from Washington.
North American trade has survived other fights, but this moment feels different.
The foundation of trust has cracked. Businesses now consider long-term investments with the assumption that the US may change policy overnight.
The real cost of Trump’s tariff-first strategy
The White House highlights tariff revenue and a narrower trade deficit. Indeed, August’s deficit fell below $60 billion, the lowest since 2023.
Tariffs are projected to bring in more than $2 trillion over the next decade.
Those numbers appeal to voters who believe the US has been exploited by trading partners.
Source: Bloomberg
However, other indicators show that GDP growth is lower than it would be without the tariff wall. Prices are higher.
Source: Peterson Institute for International Economics
The stock market saw trillions erased during the early tariff announcements. Major partners are hedging away from the US.
This situation matters more than any short surge in tariff collections.
Trump’s moves show an obvious pattern so far. It begins with an extreme opening move, a market shock, a sharp reaction overseas, and then a partial retreat.
But this cycle weakens trust in American policy and raises the cost of doing business everywhere.
As of now, China accelerates domestic chip production, Brazil leans toward BRICS, India questions the value of alignment with Washington, and Canada rethinks its decades-long assumptions about its southern neighbour.
Trump’s supporters say this is the necessary pain of resetting global trade.
But for now, the US is paying higher prices at home while pushing key partners into the arms of competitors.
The pressure on China has produced only partial gains. The costs are spread across sectors from soybeans to semiconductors.
The geopolitical dividends remain unclear.
The world has seen aggressive US trade policy before. A superpower that governs through sudden tariffs and reversals forces the global economy to adapt in ways that weaken the very leverage it seeks to use.
The second term is less than a your through, so the market swings, the supply chain adjustments and the diplomatic fallout will continue.
What is already clear is that Trump’s trade strategy has delivered some dramatic changes. But who really benefits from those changes is what we should be asking.
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