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Zhou Xiaoming

After US President Donald Trump announced “reciprocal” tariffs on April 2, China and the European Union struck back with retaliatory tariffs. As many as 70 countries approached the US for trade talks, he said. He eventually suspended the new levies on most of his targets, with the EU pausing its tariffs in response. However, Trump increased the tariffs on goods from China, which retaliated in kind.
Despite the reprieve, the world has good reason to be concerned about Trump’s tariff threats. Apart from being extremely unreasonable, they are highly destructive to the global economy.
On “Liberation Day”, Trump saved his highest tariffs for some of the world’s most underdeveloped countries. In Asia, Cambodia faced 49 per cent and Bangladesh 37 per cent; these rates could come into effect after the 90-day pause period.
Equally deplorable, Trump’s “Liberation Day” imposed a baseline 10 per cent levy on imports that is still in effect. Many of these countries export garments, footwear and primary products such as minerals to the US. Since the Trump administration has no clear plan to develop these sectors, it is plausible that his tariff war is meant to boost US government revenue and help fund tax cuts.
Moreover, Trump’s sweeping tariffs are shaking the global trading system to the core. Under the World Trade Organization, countries are required to treat each other equally. Members must apply the same tariff rates to all parties. Charging some members higher rates than others, as the reciprocal tariffs threaten to do, stands against the cornerstone of the global trading system.
Trump’s trade policy also contravenes WTO rules by increasing US import duties without the agreement of other WTO members. All WTO members have a bound rate – the ceiling on their custom tariff rates. These rates are the result of decade-long negotiations, often under US leadership, to balance the interests of all members.

For a member to increase its bound rate, all other members must agree. And yet, Trump’s reciprocal tariffs, if implemented, will push the US’ effective tariff rate to over 20 per cent, far exceeding its average bound rate of 3.4 per cent.
Trump’s tariffs also upend the way global rules are written. Instead of multilateral settings where decisions are made collectively through negotiation and cooperation, Trump has decided he alone can write rules for the world. He is taking the world into a new era in which countries are “dying to make a deal” with him.
Deals that qualify as free trade agreements should be welcome. However, the outcomes of negotiations ought to be in compliance with the WTO’s most-favoured nation principle; any concessions to the US should be offered to all other WTO members.
Moreover, countries should be able to say no to US tariffs higher than its bound rate, preventing Trump from turning them into US accomplices in dismantling the WTO. Trump might drop his reciprocal tariffs entirely in exchange for concessions. But regardless of the final outcome, his very act of slapping reciprocal tariffs goes against WTO rules.




Many might regard zero-for-zero tariffs as reciprocal, but not Trump. He rejected the European Union’s proposal for such tariffs on industrial goods. He seems more interested in a trade deficit of zero. Zero tariffs would undermine Trump’s goal of bringing jobs to the US as manufacturers might opt to set up shop outside the US instead.
Unilateral reductions of all tariffs on US goods are also unlikely to satisfy Trump. White House trade adviser Peter Navarro said Vietnam’s offer to eliminate all tariffs would not suffice for the US to make any concessions.
Trump’s appetite is much bigger than what most countries are prepared to offer. He has decided to wield tariffs to get what he wants: increased investment in the US economy and support for US imports. He is also targeting “non-tariff barriers” such as state subsidies, value-added taxes and alleged currency manipulation to change other countries’ economic systems in a way that will restore the US’ competitive edge globally.
Will his team be able to complete negotiations within the 90-day pause period? Trump couldn’t care less. After all, regardless of how events turn out, Trump cannot lose in the eyes of his supporters. He will emerge as the victor if agreements are reached, which will means he has succeeded in extracting maximum benefit by stoking trade tensions. If there is not enough time for all negotiations to conclude, he could still push ahead with his reciprocal tariffs.

Given his “America first” mantra on trade, Trump will try to get as many concessions as possible. He may show some flexibility for countries that he needs to help build an allied front against China but it is unrealistic to expect him to be lenient.
Even Japan may be in for a new Plaza Accord, despite pledging to boost investment in the US. And as Israeli Prime Minister Benjamin Netanyahu found out, eliminating trade barriers and deficits was not nearly enough to dent Trump’s 17 per cent tariff.
Small trading nations are even more vulnerable to Trump’ bullying. “Showing your muscle, it seems to me, is the way to transact with him and his people,” said former WTO head Pascal Lamy, who noted that the US president’s “tactics are based on extortion”.
Indeed, neither compromise nor concession offers a solution to Trump’s tariffs. The rest of the world should therefore come together to push back against Trump’s reciprocal levies if a 1930s-style global trade war and economic recession is to be averted.


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Countries hoping to negotiate away Trump tariffs should think again

Workers sew garments in a factory in Savar, on the outskirts of Dhaka, on April 9. Some of Trump’s highest tariffs are on underdeveloped countries. In Asia, Cambodia faced 49 per cent and Bangladesh 37 per cent; these rates could come into effect after the 90-day pause period. Photo: AFP

Demonstrators hold champagne glasses and signs that read “Trillionaires for Trump” during a protest against tax cuts outside the Internal Revenue Service offices in Manhattan’s Financial District, on April 15. Some of the Trump tariffs target countries that export apparel and footwear. Since the US has no clear plan to develop these sectors, the tariffs might be intended to help fund tax cuts. Photo: dpa

(From left) White House senior counsellor for trade and manufacturing Peter Navarro and US trade representative Jamieson Greer look on as US President Donald Trump delivers remarks on tariffs in Washington, on March 26. Photo: EPA-EFE

Trump’s tariff wall was never about fairness or reciprocity

A worker stocks shelves with products imported from China at a market in Los Angeles on April 8. What President Donald Trump wants is to break America’s decades-long dependence on imports. Photo: EPA-EFE

A worker uses a sewing machine at a textile factory in Maseru, Lesotho on March 19. Lesotho, which makes denim for American brands, was hit with a 50 per cent tariff. Photo: AFP

Trump has lit a fire under the global search for a dollar alternative

US President Donald Trump signs an executive order as Treasury Secretary Scott Bessent (second from right) and Commerce Secretary Howard Lutnick look on in the Oval Office of the White House on April 9. Photo: AFP 

Like Cixi, Trump has made the mistake of declaring an ill-advised war

US President Donald Trump speaks during a photo opportunity on the South Portico of the White House on April 9. Photo: AFP

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Trump’s appetite exceeds what most nations can offer. He couldn’t care less if negotiations are not completed within the 90-day pause period


Trump’s appetite exceeds what most nations can offer. He couldn’t care less if negotiations are not completed within the 90-day pause period.


Donald Trump

World Trade Organization (WTO)

Trade

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US-ally trade wars

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Countries hoping to negotiate away Trump tariffs should think again

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Trump’s appetite exceeds what most nations can offer. He couldn’t care less if negotiations are not completed within the 90-day pause period

Trump’s appetite exceeds what most nations can offer. He couldn’t care less if negotiations are not completed within the 90-day pause period