US President Donald Trump’s reciprocal tariffs have shaken the Global South and developing economies across the world.
Described as a “surgical strike” and “targeted killing” of China, the imposition of 54 percent duties on Chinese products has had far-reaching effects.
Southeast Asian countries, their industries, communities and economies—particularly China (54%), Vietnam (45–46%) and Pakistan (29%)—have been severely impacted.
Global leaders have denounced the move as “unjustified,” “unilateral,” and “anti-development,” warning of its threat to the international trading system.
Additionally, the policy carries profound global socio-economic, geopolitical and geostrategic consequences.
Interestingly, the White House’s justification declaring Trump’s move as an attempt to increase the country’s competitive edge, protect sovereignty and strengthen its national and economic security has many serious policy flaws.
Moreover, insisting America’s persistent annual trade deficits as the root cause of the outsourcing of its manufacturing base, the White House innocently labelling tariffs as a Trump Card to boost domestic manufacturing capacity and reduce the country’ dependency on foreign adversaries.
Contrary to the White House “self-claimed” justification and “whimsical” financial assessments trade deficits have been a tenacious feature of the US economy, averaging approximately 3.1 percent of the country’s GDP annually since 2008 however, this trade imbalance is a result of the country’s structural economic factors, not foreign trade practices.
Truly, consumer spending has been the main driver of the US economy and the US Central Bank reported that personal consumption accounted for nearly 68 percent of the country’s GDP in 2024’s fourth quarter.
When domestic production cannot keep up, the US consumption-based economy has contributed to its high demand for imported goods.
Undoubtedly, the US economy has a serious shortage of skilled workers, high costs for infrastructure and technological barriers hurting its manufacturing capacity and economic competitiveness.
Thus instead of blaming trading partners the US policy makers should address the country’s structural economic woes first if it is sincere in fixing its trade imbalance, bringing manufacturing back and strengthening economic security.
Moreover, the US reciprocal tariffs seem to be based on unilateral and subjective assessments, violating international trade rules, severely undermining the legitimate rights and interests of relevant parties and representing a typical act of unilateral bullying and strong dissatisfaction of many trading partners vividly reflecting its weak justification and persistent economic whims & wishes eroding international trading system and economy alike.
It seems that Trump just dropped a nuclear bomb on the global trading system.
Thus the trade war escalation is going to lead to higher prices for Americans and slower growth in the US, while many countries around the world could be plunged into recession.
Definitely, there will be no winner in a trade war and protectionism leads nowhere.
China urges the US to immediately remove unilateral tariffs and resolve differences with trade partners through dialogue.
The China’s commerce ministry (MOFCOM) strongly opposes the move and will firmly take countermeasures to safeguard its own interests.
Critical analysis of history has proven that raising tariffs does not solve US’ own problems; it harms US interests while also threatening global economic growth and the stability of industrial and supply chains.
JPMorgan analysts gave the US economy a 40% shot of entering a recession.
It noted that the tariffs would hike taxes on Americans by US$660 billion a year, the largest tax increase in recent memory by a longshot.
It will cause prices to surge, too, adding 2% to the Consumer Price Index, a measure of US inflation that has struggled to come back down to earth in recent years.
Thus the impact on inflation will be substantial and the full implementation of these policies will be a substantial macro-economic shock.
The European Union is preparing countermeasures to US President Donald Trump’s announcement of 20% tariffs on imports from the bloc, which it called a “major blow to the world economy.
Ursula von der Leyen, head of the European Union’s executive arm, added that the tariffs would be felt immediately.
In summary, Trump’s barrage of tariffs has disrupted long-standing global trade relations, rattling markets and businesses that have relied on these arrangements for decades.
While the tariffs may cause short-term pain for Chinese firms, they will not significantly harm China’s economy due to its diversification, price competitiveness and manufacturing capacity.
As the largest trading partner for over 150 countries, China has alternative markets to sustain its global status.
In contrast, Trump’s strategy of maximum pressure, mixed with sporadic diplomatic overtures, highlights a geopolitical paradox of pressure and pride.
Chinese President Xi Jinping, on the other hand, adopts a more methodical, risk-averse approach, focusing on cooperation and competition.
Xi’s strategy aims to avoid countermeasures from other nations that could harm American companies relying on international markets, jeopardizing US production capacity and jobs.
The UN Secretary-General’s spokesperson expressed concern over the rising economic protectionism and its potential global consequences.
The imposition of these “reciprocal tariffs” has marked a shift in global trade dynamics, akin to the changes seen in defense and security.
The tariffs violate World Trade Organization rules, undermining the multilateral trading system and presenting a self-defeating approach.
Trump’s tariff policies overlook domestic economic factors, attributing trade imbalances to foreign practices.
The root cause of the US trade deficit lies in its low savings rate, not a lack of “reciprocity” in trade relations.
—The writer is President, Pak-China Corridor of Knowledge, Executive Director, CSAIS, regional expert: China, CPEC & BRI. (mehmoodulhassankhan@yahoo.com)
