Trump’s Trade Wars and Kazakhstan’s Economic Jitters
U.S. President Donald Trump is addressing his country's economic challenges with aggressive trade policies, threatening tariff barriers and demanding concessions from major economies. The Times of Central Asia explores whether these actions could deepen economic challenges in Kazakhstan and the broader Central Asian region. A New Round of Trade Wars In early February, the United States officially announced a 25% tariff on imports from Canada and Mexico, alongside a reduced 10% tariff on Canadian energy resources. Additionally, a 10% tariff was imposed on all Chinese imports. The justification given was to curb illegal immigration and drug trafficking. While Mexico and Canada managed to delay the new tariffs through negotiations, China responded swiftly with retaliatory measures. According to China's Ministry of Finance, Beijing imposed a 10% tariff on U.S. oil and agricultural machinery imports, and a 15% duty on coal and liquefied natural gas (LNG). Additionally, Chinese regulators launched an antitrust investigation into Google, further escalating tensions. Despite these developments, a resolution remains possible, though seemingly ever more distant. On February 3, Trump announced plans to speak with Chinese President Xi Jinping, but that call was then canceled following China's retaliatory measures. In a further escalation, on February 5, the US Postal Service said it has stopped accepting parcels from mainland China and Hong Kong until further notice. Meanwhile, Trump has also signaled plans to impose new duties on goods from the European Union. As of November 2024, China was the third-largest U.S. trading partner, accounting for 11.3% of total U.S. foreign trade. Mexico (15.4%) and Canada (13.8%) ranked first and second, respectively. In contrast, Kazakhstan and other Central Asian nations do not rank among the top 15 U.S. trading partners. Domestic Issues Outweigh External Pressures According to economist Aidarkhan Kusainov, Trump's trade policies are unlikely to have a direct impact on Kazakhstan and Central Asia. Speaking to The Times of Central Asia, Kusainov argued that domestic economic challenges far outweigh the influence of global trade wars. "Our economy faces significant internal distortions, making global trade wars a relatively minor factor. Inflation in Kazakhstan is not caused by external pressures but by rising fuel and utility costs, tax policies, and discussions about increasing value-added tax (VAT). Within a short period, the tenge’s exchange rate against the U.S. dollar has shifted from 490 to 530," he said. Kusainov further emphasized that if Kazakhstan's inflation rate were around 2%, any impact from global factors would be worth analyzing. However, with official inflation at 9% - and real inflation likely much higher - domestic issues are the primary concern. "Our economy is so small compared to the world's leading economies that its presence in the global market is nearly imperceptible. By economic volume, we are smaller than some Chinese provinces. Other Central Asian countries are even less integrated into global trade," Kusainov noted. He warned that only a large-scale global crisis could significantly impact Kazakhstan’s economy, potentially exposing internal vulnerabilities that the government can no longer mitigate. Inflation Risks Inflation remains a pressing concern in...
