Eswar Prasad
The era of increasingly free and extensive international trade, built on a rules-based system that the United States helped create, has come to an abrupt end. On April 2, in a theatrical White House event, U.S. President Donald Trump rolled out a series of massive tariffs that will affect almost every foreign country. In one sense, his announcement wasn’t a surprise: from the moment he took office, businesses and financial analysts knew that Trump would raise trade barriers. But the scale and scope of the tariffs confirmed their worst fears. In one fell swoop, Washington has severely restricted international commerce.
In justifying this new era of tariffs, Trump has argued that the United States is the victim of unfair trading practices. As with many of Trump’s ideas, there is more than a kernel of truth in his claims. China, for instance, has taken advantage of World Trade Organization rules to gain access to other countries’ markets for its exports while limiting access to its own markets. Beijing has also used extensive subsidies and other measures to boost the global competitiveness of Chinese companies, including by forcing foreign firms to hand over technology.
But rather than fixing the rules that some U.S. trading partners took advantage of, Trump has chosen to blow up the entire system. He has taken the hatchet to trade with practically every major U.S. trading partner, sparing neither allies nor rivals. China now faces high tariffs, yes, but so do Japan, South Korea, and Taiwan. Long-standing, mutually beneficial economic relationships and geopolitical alliances have counted for little.
No comments:
Post a Comment