Washington “U.S. president Donald Trump announced on Wednesday the widest duties so far, calling this day the “Day of Liberation” of American trade. The fresh tariffs are of a two-step nature: the basic 10% rate will apply to all countries and additional retaliation duties will be imposed on countries accused of applying non-tariff barriers.
Retaliation for "unfair" practices
The fresh retaliation duties will represent half of the value of the trade barriers which, according to the Trump administration, the country has imposed on the United States. These barriers include exchange rate manipulation and VAT.
During the conference at the Rose Garden, Trump presented a list of fresh rates, including 34% for China, 24% for Japan and 25% for South Korea..
End of the free trade era?
Trump's decisions mean a extremist departure from US trade policy after planet War II, which was based on an open, principle-based global trade system. So far, Washington has encouraged partners to lift barriers, arguing that this increases access to markets for US exporters. Supporters of this strategy besides highlighted geopolitical benefits, specified strengthening of alliances.
The Trump administration, however, rejects this doctrine by relying on protectionism. As J.D. Vance explained last month, the belief that plan and production could be separated was a mistake. "Basing on inexpensive abroad labour is like a drug," said Vance, announcing that the White House's goal is to decision supply chains back to the US.
Market reaction: Fears of recession
Wall Street accepted Trump's fresh ideas with concern. Goldman Sachs in the Sunday study lowered the US GDP growth forecast for 2025 from 1.9% to 1.5%, arguing that the average rate of work would increase by 15 percent points. The Bank besides increased the estimated probability of recession over the next 12 months from 20% to 35%.
Will customs repair the trade deficit?
Trump has for years pointed to the US trade deficit with countries like China as evidence of "injustice" in trade. However, as the Congressional investigation Service (CRS) reports, trade barriers and subsidies have a lower impact on the global US deficit, which is mainly due to low levels of savings in the US economy. Experts propose that more effective methods of improving the balance of trade would be to increase savings or to depreciate the dollar.
The fresh duties are Trump's next step towards economical nationalism. Although the administration argues that they will increase employment and production in the US, economists inform against the effects on economical growth and marketplace stability. The debate on whether protectionism will be effective is just beginning.
Sources: Nikkei Asia, The Guardian, SCMP
Leszek B. Glass
Email: [email protected]
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