Big Bang: Trump’s “Liberation Day”, the US jumped from the most open -made economy to one of the most protected on the planet. The new universal tariff of 10% adds “reciprocal tariffs” defined by mercantilist criteria against six dozen trading partners. It is a “nuclear bomb in the global trade system” in the definition of Ken Roggoff, former FMI.
In the real world, based on the “most favored nation” rule established by GATT in 1947, each country fixes universal tariffs by product groups (positive exceptions are trade and negative agreements, commercial sanctions regimes). However, in the Trumpian parallel universe, expressed in a table of percentages emanating from the White House, there would be tariffs applied by each country “over the US”. Such “reciprocal tariffs” are Trump’s replica not to tariff barriers but the commercial surpluses of their partners.
In practice, in the gesture of supreme contempt for multilateralism, the US created a universal system of sanctions. , 54%; , 20%; Japan, 24%; South Korea, 25%; India, 26%; Vietnam, 46%; and Taiwan, 32%, are the biggest most penalized partners. Trump also promises to double the tariff dose about countries that dare to retaliate. In your mind, only the US, the largest global importer, have a devastating arsenal in a total trade war.
In fact, who cries first is the others. And Mexico, who directs more than 75% of their exports to the US, have escaped “reciprocal tariffs” but follow the target handle of special tributations on cars, steel and aluminum. The US is the destination of more than 15% of Chinese, Japanese, Indian and South Korean exports and almost 30% of Vietnamese. Asian economies will experience severe bleeding. The partial exception is the European Union, the largest commercial block on the planet, whose vast interior market provides the safe exercise of retaliation sport.
However, who cries last is the US. Trump sees the immense American commercial deficit as a sign of weakness and proof that the rest of the world extort his country. The truth is the opposite of this mercantilist belief: the external deficit, financed without difficulties by the nation that emits the “world currency”, reflects the richness of American society.
Trump imagines that tariffs are tools for balancing trade balance and attracting investments capable of promoting an extensive US reindustrialization. In practice, the tariff wall will raise internal prices, reducing the purchasing power of US consumers and the potential for the growth of the economy. In addition, due to higher production costs and the effect of tariff retaliation, it will reduce exports and therefore not eliminate the commercial deficit.
The main US geopolitical alliance systems (Japan, South Korea, Australia, Taiwan and, more recently, India) are backed by intense exchanges of goods, services, capital and technology. Excluded China, the Trifuan Tariff War represents an American aggression against its strategic allies. Its structural cost extends far beyond the economic sphere: Trump crumbles the pillars on which the so-called West rises. Xi Jinping and Vladimir Putin laugh last.
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