Closed Door Day: what have the US tariffs done to the global economy
2025 was the year of a revolution in the global economy. The talk about deglobalization and fragmentation of the global economic space has received quite tangible expression in the form of the largest series of foreign trade duties. The United States took over the bulk, imposing tariffs on most of the rest of the world, but other countries soon joined the game. Why the duties were introduced and how they will change the global economy — in the final material of Izvestia.
For a modern person accustomed to the inviolability of open borders, the free movement of goods and capital, as well as open borders, the actions of the Donald Trump administration look like an anomaly. However, from the point of view of the entire history of the United States, the anomaly was precisely the period from 1945 to 2016. Up until the Great Depression and World War II, the United States was one of the most protectionist countries in the world. High tariffs were considered by the founding fathers and subsequent generations of politicians not only as a way to protect the young industry from British competitors, but also as the main source of replenishment of the federal budget (before the introduction of income tax).
A paradigm shift occurred in the middle of the 20th century, when the United States, with overwhelming industrial superiority, opened its markets in exchange for the geopolitical loyalty of its allies. This system worked for decades, but by the 2020s it had led to the accumulation of enormous imbalances. The chronic US trade deficit ($918 billion in 2024) and the deindustrialization of the Rust Belt have created a demand for a change of course. In 2025, the pendulum swung back.
McKinley's Shadow
Donald Trump has never hidden his views. Back in the 1980s, he criticized Japan's trade policy, and in 2016, he made protectionism the basis of his platform. When he returned to the oval office, he just continued what he started in his first term, but on a much larger scale.
Trump repeatedly referred to William McKinley, the 25th president of the United States, who in 1890, as a congressman, became the author of the famous tariff act, which raised average duties to almost 50%. For the current owner of the White House, the tariff has become a universal tool for all occasions. It serves as a means of replenishing the treasury, as a bargaining chip, and as a way to bring production back home.
In 2025, this philosophy was embodied in a universal base tariff (from 10% to 20% for most countries) and protective duties for China (60% and above). The concepts of "economic security" and "fair deal" have outweighed arguments about the comparative advantages of economies.
Beijing's Resource Gambit
The central event of the year was the escalation of the trade war with China. Washington, as promised, imposed 60 percent tariffs on a wide range of Chinese goods, effectively trying to exclude China from the supply chains of the American market. This led to a dramatic drop in direct trade. With each escalation, the percentage of duties rose higher and higher.
However, Beijing, having learned from the experience of 2018-2019, has prepared an asymmetric response. China did not mirror the increase in duties on American soybeans or Boeing, although there were restrictions there, but hit the most painful spot — the raw material base of the high-tech industry. Using its virtual monopoly on the market of rare earths, as well as gallium, germanium and antimony, China has imposed strict export restrictions.
By the middle of the year, it became obvious that without Chinese raw materials and primary processing technologies, the American military-industrial complex and the "green energy" sector would stand up. The production of modern chips, radars, and electric motors for military equipment has been threatened. The lobbying efforts of the Pentagon and technology giants forced the White House to make a tactical retreat. A complex exclusion mechanism was created for critically important minerals, which allowed both Beijing and Washington to save face and leverage. The average tariff for Chinese products in the United States was 32%, which is also a lot, but significantly less than the figures that were mentioned in the middle of the year. Currently, the US consumer market is half closed to China, but industrial chains in strategic sectors have not been broken. The trade war has taken a break, at least for a while, until the United States starts producing its own rare earths.
Capitulation of Brussels
If there is a war of attrition with China, then the United States has achieved great success on the western front. The imposition of tariffs against the European Union, Canada and Mexico caused panic in the capitals of the allies. Canada and Mexico, whose economies are integrated with the United States under the USMCA agreement, after a series of nervous negotiations agreed to renegotiate the terms of the agreement and tighten controls on Chinese transit in order to avoid the worst-case scenario. Approximately 85% of these countries' trade with America is now duty-free again.
The situation with the European Union has developed more dramatically. Brussels initially threatened harsh retaliatory measures by preparing lists of American goods for counter-sanctions. However, the economic reality of 2025 played against Europe. Germany, which is in a deep structural crisis, and France, which is suffering from a budget deficit, could not afford to lose the American market, the only one that showed an increase in demand.
As a result, the European Union actually capitulated. A "managed trade" agreement was concluded, under which the EU pledged to purchase certain volumes of American LNG and agricultural products, as well as synchronize its tariffs against China with those of the United States. Brussels retained access to the US market, but at the cost of losing some of its economic sovereignty. In addition, the import duty rate for European goods remained at 15%.
Brazil, on the other hand, has managed to achieve more or less acceptable conditions: most of its products are subject to 40 percent tariffs on trade with the United States, but coffee and a number of other agricultural products are not subject to these conditions.
Closed Door Day
The US actions have triggered a global wave of protectionism not directly related to Washington. Realizing that Chinese goods displaced from the American market would flood into other regions, governments around the world began to erect their own barriers.
Even before the final deal with the United States, the European Union imposed protective duties on Chinese electric vehicles (up to 45%), fearing the collapse of its automotive industry. Turkey, India, Brazil, and even Southeast Asian countries (Indonesia, Thailand) raised tariffs on Chinese steel, chemicals, and consumer goods during the year. Global trade began to fragment into regional blocks surrounded by tariff walls. The concept of a global market with uniform WTO rules has finally lost its relevance in 2025.
The Inflationary Paradox
The most unexpected outcome of the year was the macroeconomic reaction in the United States itself. Most academic economists and Wall Street analysts predicted that massive tariffs would lead to a sharp spike in inflation, similar to the crisis of the 1970s. The logic was simple: importers would pass the costs on to consumers.
However, this did not happen. By the end of 2025, inflation in the United States remained within controlled limits (about 3-3.5%), although above the Fed's targets. Why didn't the apocalyptic predictions come true?
Firstly, the currency factor has worked. The introduction of tariffs and rising U.S. bond yields have led to a strong strengthening of the dollar. This made imports from countries that were not subject to the strictest restrictions cheaper, partially offsetting the effect of duties. Secondly, Chinese exporters, who are losing markets, have embarked on an unprecedented reduction in selling prices and devaluation of the yuan, taking part of the tariff burden on themselves. Third, American retailers, faced with limited demand, were forced to reduce their own margins rather than raise prices.
Moreover, by the end of the year, the opinion in the expert community had strengthened that tariffs in the current conditions could be a deflationary factor. They act as a consumption tax, removing liquidity from the economy and reducing real demand. Supply chain disruption and uncertainty have led to a reduction in investment and a slowdown in global growth, which puts pressure on commodity prices (oil, copper).
The main victim of this scheme was not the United States, but the European Union. The export-oriented model of the EU economy, deprived of cheap Russian energy resources and now facing barriers in the US and Chinese markets due to the slowdown of the latter, has plunged into stagnation. Europe is paying the price for someone else's trade war.
Fate is in the hands of the judges
Despite the apparent triumph of protectionist policies, the Trump administration faces serious risks. The U.S. Supreme Court is considering a lawsuit by a coalition of importers and trade associations challenging the legality of imposing such large-scale duties.
The plaintiffs point out that presidential powers under the Trade Expansion Act of 1962 and the International Emergency Economic Powers Act (IEEPA) involve targeted measures in response to specific threats to national security. Using these mechanisms to impose universal tariffs against all countries indiscriminately may be considered an abuse of authority.
If the Supreme Court, dominated by conservatives who adhere to the letter of the law (textualists), takes the side of business, it will become a fiasco of historic proportions. The treasury will have to return hundreds of billions of dollars of already paid duties to importers, which will blow a huge hole in the budget.
However, the White House has a plan B. Trump has already made it clear that in the event of a negative verdict, he will appeal to Congress, where the Republican majority is ready to legalize tariffs retroactively through legislation, for example, by passing a law on "Mutual trade."
Against the current
Paradoxically, the direction of Russian foreign trade over the past year has been rather the opposite. Our country is mainly threatened not by duties, but by sanctions, which have reduced the movement of goods and services in previously priority areas to a minimum. With the half-hearted blockade and endless sanctions packages, Russia has no choice but to expand its partnership with those countries that do not join the sanctions and try to avoid their consequences.
Last year, the EAEU concluded two important deals with the UAE and Indonesia, significantly reducing trade barriers for both countries. But even more important are the ongoing negotiations with India. The fourth economy in the world is an extremely promising market, as well as a potential source of cheap goods that Russia cannot produce in the required volume. Given the progress of the negotiations, the probability that an agreement will be concluded in 2026 is quite high.
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