In many ways, the U.S. government has taken a courageous step. They’ve proposed a troubling escalatory set of tariffs, which would slap extreme tariffs on countries with big trade surpluses with the U.S. President Donald Trump has indicated that the new tariffs will take effect on April 5. These tariffs will be particularly aimed at countries like Vietnam, China, and Thailand. The administration continues to see these tariffs as necessary tools for lowering trade deficits. Do they sincerely hope to do their part in getting foreign manufacturing to come back to American shores?
Countries will be given individualized tariffs, corresponding to their trade deficits with the U.S. Vietnam will experience a shockingly high 46 percent tariff, while China suffers a 34 percent tariff and Thailand a 36 percent tariff. A 25-percent tariff will be applied to all goods that aren’t covered by the U.S.-Mexico-Canada free-trade agreement (USMCA). Energy products will continue to be exempt from this charge.
Trump was determined to present these tariffs as a means to address unfair trade practices. Beyond that, he focused on their ability to make money – enough to chip away at the ballooning U.S. debt and finance tax cuts. He added, “We’ll pay them about half of what they are – and have – been billing us. So the tariffs will be partial not full reciprocal.”
The administration appears poised to implement the tariffs under the International Emergency Economic Powers Act of 1977. This act gives them the authority they need to implement such measures in order to protect US national security interests. Though Mexico and Canada have been granted an exemption from the tariffs, both countries have promised to retaliate with tariffs of their own. In response, Canadian Prime Minister Justin Trudeau condemned the move as deeply regrettable. In response, he promised that his administration would vigorously combat U.S. tariffs to defend Canadian workers and industries.
Trump’s announcement occurs during a period of dramatically rising tensions between global trade relations. Analysts have been cautioning for months that these tariffs could produce impact far-reaching geopolitical ramifications. More dangerously, they may damage constructive alliances established over the last 30 years.
“The unilateral action that the Trump administration has taken today against every nation in the world does not come as a surprise,” said Australian Prime Minister Anthony Albanese. He added, “But let me be clear: They are totally unwarranted.”
Trump’s approach to trade has always been heavily influenced by nationalism and protectionism. He portrayed the new tariffs as needed to “punish countries that have been abusing” the U.S. economically.
During his announcement, Trump addressed foreign leaders directly, stating, “To all of the foreign presidents, prime ministers, kings, queens, ambassadors and everyone else who will soon be calling to ask for exemptions from these tariffs, I say: Terminate your own tariffs. Drop your barriers. Don’t manipulate your currencies.”
From the start, economists raised legitimate alarms about how these tariffs would choke off global markets. Ireland’s Micheal Martin prime minister made a strong declaration that tariffs are harmful to all. He pointed out how they are destructive to the global economy, damaging people and companies alike.
Leaders from all affected countries have spoken out forcefully against these changes. These officials are very serious about defending their own economic self-interests. Mark Carney, then Governor of the Bank of Canada, rightly called for bold action in this time of crisis. He promised that his administration will continue to fight U.S. tariffs, protect Canadian workers and industries, and work to build the country’s strongest economy in the G7.
The administration would like you to think of these tariffs as a muscular response to bad foreign non-market trade practices. They link the tariffs to bigger worries, including border security and national sovereignty. This tactic is illustrative of the President’s belief, which has been expressed for decades. He argues that international trade agreements have benefitted everyone except American workers.
Beginning April 9, the European Union will be subjected to 20 percent tariffs. This is just days after the tariffs go into effect for every other country. This act, if passed, is likely to further inflame relations between the U.S. and its allies in Europe. Ironically, they have done this while regularly criticizing Trump’s reckless, counterproductive trade wars.
As global leaders scramble to respond to these new tariffs, it is unclear how these tariffs will create or alter the current international trade paradigm. The U.S. has already incurred criticism from all sides for its unilateralist approach to trade negotiations and international cooperation.
