Why Trump’s tariff war harms American economy, not helps it

By Wang Jiamei Source:Global Times Published: 2019/12/3 22:33:40

A woman tastes wine during the 11th "Vinifest" Wine Festival in Beirut, Lebanon, on Oct. 3, 2018. The festival was held from Oct. 3 to 6, attracting many wine dealers and wine lovers. (Xinhua/Bilal Jawich)

It seems that US President Donald Trump couldn't wait to open new battlefronts in the global trade war in an aim to lift the country's slowing economy. Trump tweeted on Monday that he would restore steel and aluminum tariffs on Brazil and Argentina due to their currency depreciations. The same day also saw the administration threaten tariffs as high as 100 percent on up to $2.4 billion worth of French products as a retaliation against France's digital tax.

The president may sincerely think that waving a tariff stick can win more benefits for American people, but he is likely to inflict more damage on the US economy in the process of destabilizing the system of global trade.

Using tariffs as a weapon is a terrible way to achieve any trade or political goal. It is not the first time for the president to initiate a tariff war against its trading partners in the name of protecting national interests, which usually ended up with outcomes like increased prices, hindered growth, and a heavier burden on taxpayers in the US.

As showed by the China-US trade war, tariffs didn't bring manufacturing jobs back to the US, although some manufacturers did leave China for Southeast Asian countries. According to the Institute for Supply Management, US manufacturing actually slipped for the fourth consecutive month in November, with new orders, production and hiring all dropping.

Under WTO rules, a country is allowed to use tariffs when its interests are seriously hurt, but that shouldn't be the excuse for the abuse of tariffs over any trade fight. For decades, the US government made great efforts to build a US-oriented global trade system, but now by introducing a flurry of protectionist measures, the US itself is tearing a hole in the old trade system by giving other countries the excuse to do the same. 

The idea of making a better deal through imposing tariffs is misguided, and it will only isolate the US from its trading partners and encourage retaliation instead of doing any good to its economy. In recent years, America's lead in unilateralism has already upset and angered many of its allies, weakening the united front of the US-centered trade system. Some allies like Japan tried to establish their own trade network by signing free trade agreements with their trading partners. 

For instance, Japan and the EU signed a free trade agreement last year, which came into force as of February 1, 2019. Japan has also ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade agreement signed by 11 countries including several US allies.

The Trump administration may think it is able to rebuild a US-centered web of trade agreements in the future, but the question is whether it will be as dominant as it once was in the new system.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: GT VOICE

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