WILL PRESIDENT TRUMP’S TARIFF POLICY BENEFIT USA ? – By N.S.Venkataraman
Ever since Trump has taken over as President of USA for second term a few weeks back, he has spoken about imposing tariff against one country or the other more than any other single subject.
Trump seems to think that imposing tariff on the imported products from a few selected countries is one sure way to achieve his pet target “ Make America Great Again”. Obviously, he is under the impression that every country is gaining at the cost of USA in one form or the other in trade terms and therefore , he appears to justify imposing tariff on the imports of goods and services from other countries as appropriate measure. In the same way, he seems to be assuming that other countries will bend at his “tariff command” without questioning .
While Trump is entitled to say “America first”, every other country is entitled to have such priority and would seriously consider the ways and means of protecting their economic and trade interests against Trump’s “tariff onslaught”
At present time, economic considerations predominantly decide the relation between different countries. When tariffs are imposed unilaterally by US on other countries, there is bound to be a sort of counter reaction from such countries sooner or later, perhaps, sooner than later.
It is true that USA is the strongest country in the world today in military strength, economic terms and prosperity index . It does not in anyway mean that USA is not vulnerable to the international pressure. Just as Trump is trying to pressurize the other countries, it is quite possible that other countries united together can find ways and means to challenge tariff imposition by President Trump,
It is true that USA is the strongly consuming country which has made it an attractive destination for other countries to sell their goods and commodities to USA. But, when heavy tariffs are imposed on products and services from other countries in USA, US market is bound to become less attractive for countries suffering tariff imposition by USA and they are bound to look for market elsewhere.
The US economy is projected to be valued at over $30.3 trillion in 2025, making it the world’s largest economy. This is based on estimates from various organizations, including Forbes and the UN. However, the economy of China is also large and is rapidly expanding. According to current projections, the size of China’s economy in 2025 is expected to be around $18.68 trillion USD in nominal GDP, with most analysts forecasting a growth rate around 4.5% for the year, signifying a relatively stable and moderate expansion.
With high population level much higher than that of USA and with growing economy, it is possible that the overall consumption level in China may outweigh the consumption level in US in near future,. In such a case, Chinese market will become bigger attraction than the tariff imposed in US market for several countries.
President trump has now imposed tariff on China, Canada, Mexica and is threatening to impose tariff on India, European Union. Trump alone knows which other countries he has in mind.
Dual position :
While Trump has now embarked on what appears to be becoming a global tariff war, he is also trying to emerge as a peace maker in the world , which are two contradictory positions. Since economic factors influence relationships between countries , one cannot be a peace maker and tariff war monger at the same time.
In his peace efforts, Trump appears to be taking some hard stand which may not be considered as genuine peace moves , since he appears to be taking the side of one country ( on the side of Israel in Gaza conflict and on the side of Russia in Ukraine conflict ) and many observers seem to be of the view that Trump is unfair to one country while excessively supporting another country. This is not the ideal way of emerging as a peace maker.
Possible grim reality :
The possible grim reality for President Trump is the alternate group emerging in recent years namely BRICS, which appears to be largely led by China and many countries have expressed readiness to join BRICS . With Trump antagonising Europe by letting down Ukraine with Europe likely to dilute its traditional relationship with USA , any move by BRICS to introduce global currency in parallel to the US dollar would make USA very vulnerable. Trump’s” tariff weapon” will not be adequate to challenge BRICS in such a case.
Finally, imposition of tariff on other countries can become a self inflicted wound for USA, as several imported commodities from other countries would become costlier for US citizens , with USA not producing them in adequate level.
Perhaps, in the coming months, Trump’s actions on tariff front would become model for other countries , as to how one cannot impose its will on other countries in the increasingly inter dependence scenario between countries in the global sphere.
