Trump’s tariffs against China: A threat to countries’ legitimate development rights

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OPINION

By Allawi Ssemanda

For almost four months now, the Trump administration has arguably rattled global trade, economists, shocked business executives and set off heated exchanges with not only the world’s second largest economy - China, but also the US’s largest trading partners and allies like Canada and Mexico.

While economists and corporate executives expressed concerns that such shift in Washington’s trade policy was a gamble with potential of causing a ricochets in the global economy, Trump appeared unbothered, selling his tariffs policy with celebratory tone calling tariffs “the greatest thing ever invented,” as he branded the day he announced his now paused tariffs a “liberation day.” “This is one of the most important days, in my opinion, in American history,” noted Trump as he announced imposing a now paused 10% universal tariff on all imported foreign goods in addition to “reciprocal tariffs” on several countries he claims have always “cheated” America. 

While he later announced that he was pausing his tariffs for 90 days to allow negotiations, he maintained 145% tariffs on Chinese goods, prompting Beijing to announce retaliatory tariffs of 125% on US goods.

Also, Beijing made its position clear, strongly condemning these tariffs, arguing they “severely infringe upon the legitimate rights and interests of nations, severely violate World Trade Organisation (WTO) rules, severely harm the rules-based multilateral trading system, and severely disrupt the stability of the global economic order.”

Further, Beijing noted that the US opting to use “tariffs as a tool of extreme pressure for selfish gain is a textbook example of unilateralism, protectionism, and economic coercion.” This, China maintains, “violates basic economic laws and market principles, disregards the balance of interests reached through multilateral trade negotiations, and ignores the fact that the US has long reaped substantial benefits from international trade.”

While Trump argues that the US has been “unfairly” treated and “cheated” by other countries, many analysts contend that the tariff man’s main intention is to advance his protectionist agenda, which he argues will help revive domestic manufacturing with the possibility of re-shoring what he describes as American jobs.

If critically analysed, while Trump claims his tariffs mark “the beginning of making America rich again,” many economists contend his unorthodox policies will harm global trade supply and also hurt the American economy. Indeed, Larry Summers, treasury secretary under Bill Clinton, branded Trump’s tariffs “a self-inflicted supply shock.”

“This is a self-inflicted wound to the American economy. I’d expect inflation over the next three or four months to be higher as a consequence, because the price level has to go up when you put a levy on goods that people are buying,” stressed Summers. It is not surprising that the Wall Street Journal’s editorial described Trump’s tariff policies as the ‘dumbest trade war in history.’

A clear analysis of Trump’s tariffs makes one thing clear: he wrongfully thinks the US can thrive on its own and that Washington has nothing to gain from global trade. This partly explains why “tariff man’s” administration is insisting on pursuing “American Exceptionalism” and isolation. President Trump ignores the fact that in today’s global village, it is nearly impossible for any single country to embrace isolation policies and succeed without hurting itself.  

The Wall Street Journal’s editorial brings this better: “Mr Trump sometimes sounds as if the US shouldn’t import anything at all, that America can be a perfectly closed economy, making everything at home. “This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Trump may soon find out.

The US is one of the main architects of the current international economic and trade order and so should embrace the rules entirely rather than unilaterally opting to place American interests above the common good of the international community. As China noted in their position regarding Trump’s tariffs, “economic globalisation is an inevitable path for the development of human society. The multilateral trade system, with the WTO at its core and based on rules, has made important contributions to the development of global trade, economic growth, and sustainable development.”

China and some analysts believe Trump’s use of tariffs targeting China is due to Trump’s desire to “counter” China’s economic progress, which the Trump administration sees as a threat to the US's assumed right to dominate the world. Rightly so, China contends that by targeting its trade with tariffs, the US is violating WTO rules, which Beijing notes undermines the multilateral trading system.

Analysing the first Trump administration China-targeted tariffs, a study by the Cato Institute, an American libertarian think tank, found that the US’s use of tariffs targeting Chinese trade violated WTO rules. It further revealed that while Chinese companies were most affected, even American citizens were affected as China responded to the Trump administration's trade tariffs with reciprocal tariffs.

The study “Unfair Trade or Unfair Protection? The Evolution and Abuse of Section 301” contends that the laws Trump cites to impose tariffs on other countries “grants the executive branch far too much discretion in defining an actionable foreign trade practice” which may be exploited for political reasons – it allows American President to safeguard America’s trade interests by remedying any “act, policy, or practice of a foreign country [that] is unreasonable or discriminatory and burdens or restricts United States commerce.”

In light of this, as China stated in their position on Trump’s tariffs, “development is a universal right of all nations, not the privilege of a few. There are no winners in trade wars or tariff wars. All countries must uphold genuine multilateralism, jointly oppose all forms of unilateralism and protectionism, safeguard the international system...”

The opposite is disastrous because the use of tariffs to counter China does not only hinder legitimate development rights of the Chinese people but the entire global south population, especially Africa whose countries’ both social and economic development have been realized as a result of China’s economic development and Beijing’s selfless policy of building a community of shared future.

Those who can should remind President Trump that the world needs win-win cooperation and justice, not America’s hegemony! 

Allawi Ssemanda is a Senior Research Fellow, Development Watch Centre