Opinion | Trump's trade wars 'kill 1,000 enemy soldiers but lose 800'
By Chan Yan-chong
During last year's presidential campaign, Trump threatened to impose a 60% tariff on all Chinese goods if elected. Recently, on his first day as the 47th President of the United States, he signed 78 executive orders, but none included the tariff measures he had frequently mentioned. Some thought they could breathe a sigh of relief, and the Hong Kong stock market even saw a temporary rise. However, the next day, Trump announced his intention to impose additional tariffs on goods from China, Canada, Mexico, and the European Union. By taxing products from so many countries, Trump is essentially taxing the entire world. Does this signal that the U.S. is preparing to engage in a trade war with the globe? Since the U.S. began raising interest rates in 2022, the world has faced immense economic pressure. Trump's increase in tariffs could exacerbate the uncertainty surrounding global economic development, making it even more challenging to revive the economy, which would also affect the U.S.
American Consumers Bear the Brunt of Tariffs
Trump often claims that imposing tariffs on foreign goods would significantly increase U.S. treasury revenues, believing this approach is beneficial for America. However, the vast majority of manufacturing in today's U.S. has already moved abroad. American factories are unable to produce many of the imported goods. Ultimately, it is American consumers who pay the price of tariffs. Increasing tariffs is akin to imposing a consumption tax, and savvy Americans cannot possibly be unaware of this.
Starting in 2018, Trump launched a large-scale trade war against China, imposing tariffs on Chinese goods valued at hundreds of billions of dollars, with an average rate of 25%. The trade officials in the Trump administration were very careful in selecting which Chinese products to tax, exempting or lowering tariffs on those that would affect the daily lives of Americans and were hard to replace, to avoid impacting livelihoods and Trump's support among voters.
After more than a year of trade war, the trade imbalance between the U.S. and China did not improve. Trump understood that trade wars are difficult to sustain, and eventually sought negotiations with China, resulting in the "US-China Phase One Trade Deal" in 2020, which he touted as an achievement. Trump's initial term, marked by the tariff and trade wars with China, not only led to a significant low in U.S.-China relations since their establishment but also contributed to his loss in the 2020 election.
However, now Trump is making a comeback, seemingly not having learned a lesson, and is instead igniting a new round of tariff and trade wars. He plans to significantly increase tariffs on foreign goods and establish a tax bureau specifically for tariff collection. Canadian Foreign Minister stated that the Canadian government has a three-part plan in response to the tariffs: first, strengthen border management to prevent tariff activation; second, implement retaliatory measures; and third, develop long-term strategies. Minister of Transport and Internal Trade of Canada further indicated that if Trump imposes punitive tariffs on all Canadian imports upon taking office, Canada will immediately take retaliatory measures, inflicting the most significant trade impact on the U.S. economy in history. EU officials have also stated that if the U.S. imposes tariffs on EU goods, Europe will respond in kind.
Experts point out that if history offers any lessons, it is that past trade wars have led to severe economic stagnation, particularly the Smoot-Hawley Tariff Act of 1930, which is believed to have triggered a trade war, causing a significant decline in global trade. Research shows that between 1929 and 1934, world trade fell by 66%, and U.S. imports and exports with Europe also decreased by about two-thirds.
Severe Disruption to Global Supply Chains
Global opinion is increasingly concerned that Trump's proactive trade war will have significant repercussions for the U.S. and seriously disrupt global supply chains, undermine the multilateral trading system, and create greater uncertainty for the recovery of the world economy.
A spokesperson for China's Ministry of Foreign Affairs, Mao Ning, recently stated that China has repeatedly expressed its position, believing that there are no winners in a trade war or tariff conflict, and China will steadfastly safeguard its national interests. Yesterday, a spokesperson for China's Ministry of Commerce, He Yadong, indicated that tariff measures are detrimental to both China and the U.S., as well as to the entire world. China's relevant authorities have maintained communication with the U.S. side, and China hopes to strengthen dialogue and communication under the strategic guidance of the leaders of both countries, based on the principles of mutual respect, peaceful coexistence, and win-win cooperation, to properly manage differences, expand mutually beneficial cooperation, and promote the stable and healthy development of U.S.-China economic and trade relations.
History has repeatedly proven that trade wars have no winners. They only "kill 1,000 enemy soldiers but lose 800." Engaging in protectionism and unilateralism benefits no one, ultimately harming both oneself and others.
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