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E-mail Xinhua, February 15, 2025
BEIJING, Feb. 15 (Xinhua) -- U.S. President Donald Trump's plan to impose reciprocal tariffs on all trading partners has drawn wide concerns that it could trigger a trade war and dim the global economic outlook.
Trump on Thursday signed a memorandum directing his administration to determine "the equivalent of a reciprocal tariff with respect to each foreign trading partner," a decision he justified as "for purposes of fairness."
However, the Associated Press (AP) said in a Friday report that "Trump is taking a blowtorch to the rules that have governed world trade for decades," and the "reciprocal" tariffs "are likely to create chaos for global businesses and conflict with America's allies and adversaries alike."
According to Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, under World Trade Organization negotiations, "reciprocity" meant overall balance, in terms of concessions given and concessions received, between each country on the one hand and all its trading partners on the other hand, but Trump has redefined the meaning of "reciprocity" to apply on a line item basis, country by country, rather than overall balance.
"With reciprocity, as defined by Trump, U.S. tariffs would be probably on average 10 to 15 percentage points higher. In my opinion, tariffs actually hurt the U.S. economy, so while they would raise revenue ... they would reduce GDP growth," Hufbauer told Xinhua.
"Obviously, it disrupts the way that things have been done for a very long time," said Richard Mojica, a trade attorney at Miller & Chevalier, in the AP report. "Trump is throwing that out the window ... Clearly this is ripping up trade. There are going to have to be adjustments all over the place," he said.
Stephen Lamar, president and CEO of the American Apparel & Footwear Association, described the situation as "a very, very chaotic environment." "It's hard to plan in any sort of long-term, sustainable way," he said, quoted by AP.
The National Retail Federation (NRF), which represents the U.S. retail sector, has warned that the massive scale of undertaking "will be extremely disruptive to our supply chains."
"It will likely result in higher prices for hardworking American families and will erode household spending power," David French, NRF executive vice president of government relations, said in a press release published Thursday.
French said the University of Michigan's monthly consumer sentiment index continues to decline, suggesting consumers are alarmed about trade war uncertainty.
"We encourage the president to seek coordination and collaboration with our trading partners and bring stability to our supply chains and family budgets," he added.
Calling the reciprocal trade policy a step in the wrong direction, the European Union said the newly imposed tariffs will hurt the U.S. economy by raising the price of final products consumed by the American people.
"Tariffs are taxes," said the European Commission. "By imposing tariffs, the U.S. is taxing its own citizens, raising costs for business, stifling growth and fueling inflation. Tariffs heighten economic uncertainty and disrupt the efficiency and integration of global markets."
Besides the increased tax burden, which is typically passed on from importers to consumers, economists have also warned of the severe consequences for the global economy.
"Our analyses suggest that the main impact will be on growth," said European Central Bank Vice-President Luis de Guindos. "If the world embarks on the path towards a trade war, this will have an extremely negative impact on the growth prospects of the global economy," he told Xinhua in an interview.
"Increases in tariffs and quotas are a negative supply shock, especially if accompanied by retaliation. This vicious circle should be avoided," he said.
Benedikt Hueppe, general manager of the Lower Saxony Business Associations, described the tariffs as "poison," especially for the export-oriented economy in Germany.
Tariffs would also slow down the ability to innovate, Hueppe said, adding that trade wars make products more expensive and thus would drive up inflation.
The reciprocal tariffs are the latest in a series of tariff measures announced by Trump recently.
On Monday, Trump signed proclamations to impose 25-percent tariffs on all steel and aluminum imports and end all duty-free quotas, exemptions and exclusions for steel and aluminum tariffs.
While Trump hopes the move will aid the struggling industries in the United States, it also "risks sparking a multi-front trade war," Reuters reported.
On Feb. 1, Trump signed an order to impose tariffs of 25 percent on goods from Mexico and Canada, along with a 10 percent tariff on Chinese products. He later paused the tariffs on Canada and Mexico for one month to allow negotiations.
According to a new study by the Peterson Institute for International Economics, Trump's tariffs on Canada, Mexico and China, if imposed, would cost the typical, or median, U.S. household a tax increase of more than 1,200 U.S. dollars a year.
The tariffs could hit developing countries particularly hard, especially India, Brazil, Vietnam and other Southeast Asian and African countries, given that they have some of the widest differences in tariff rates charged on U.S. goods brought into their countries compared to what the U.S. charges them, CNN reported.
Brazilian Finance Minister Fernando Haddad said unilateral measures like those imposed by Trump are "counterproductive for improving the global economy."
With these announcements and moves, the current U.S. president has made a political and economic turn that will largely redefine international economic processes, said Vlade Simovic, a professor of the Faculty of Political Science at the University of Banja Luka in Bosnia and Herzegovina.
Echoing the view, Mexico's Monex Financial Group warned that global trade could enter a phase of reconfiguration in 2025 due to various risks ahead, particularly regarding Trump's tariff policy. Enditem
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