US President Donald Trump’s administration sent shockwaves across the globe after announcing that the US would impose “reciprocal tariffs” to rectify trade practices believed to have contributed to American trade deficits.
Most countries are still trying to come to terms with how these tariffs could negatively impact their economies. It is worth noting that many economists and political observers had already sounded the alarm when Trump took office in 2017, declaring his administration would enact “America First” policies.
Trump’s “America First” pledge held strong appeal for the nation’s working poor for several reasons. The flood of illegal immigration had suppressed wages for so-called “3D” jobs — dirty, dangerous, and demeaning. Even if US citizens were willing to take such jobs, they had to settle for lower pay and risk being immediately replaced if injured, ill, or absent for personal reasons.
On the international trade front, China’s entry into the World Trade Organisation (WTO) in 2001 coincided with a wave of globalist idealism sweeping across the world. This movement championed global governance mechanisms and greater powers for the United Nations (UN) to implement an international, rules-based order.
The UN, as a platform for the globalist movement, encouraged the creation of mechanisms that appeared to endorse principles favouring freer trade and open borders. Many governments embraced the long-term goal of abolishing tariffs and allowing the free movement of goods with minimal customs interference.
While “free trade and open borders” were never officially declared objectives of sovereign governments or the UN, the origins and mission of the WTO suggest that supporters of globalism leaned heavily in that direction.
China has benefitted immensely from its WTO membership, particularly by avoiding tariffs — especially from the US. The resulting trade imbalance is one of the reasons why today’s global-scale trade war is unfolding.
In a 2018 post on X (formerly Twitter), Trump declared, “trade wars are good, and easy to win”. That March, he signed a presidential memo ordering several actions — filing a WTO case against China for discriminatory licensing practices, restricting investment in key technology sectors, and imposing tariffs on Chinese products.
Also in 2018, the US slapped 25 per cent tariffs on all steel imports (except from Argentina, Australia, Brazil, and South Korea), and 10 per cent on all aluminium (except from Argentina and Australia).
China retaliated in April 2018 with 15-25 per cent tariffs on 128 products including fruits, seamless steel pipes, pork, and recycled aluminium. It also proposed 25 per cent tariffs on 106 other products including soybeans, automobiles, and chemicals. The tit-for-tat measures led to US-China trade talks, during which the US demanded that China cut the trade gap by US$200 billion within two years.
Trump’s 2.0 administration’s “reciprocal tariff” approach seems even broader, targeting both adversaries and allies. China will almost certainly respond, as it did in 2018.
Whether other nations will react the same way remains an open question. But one thing is clear: the era of free trade is over, and protectionism is making a comeback.
The views expressed here are the personal opinion of the writer and do not necessarily represent that of Twentytwo13.
