The United States has launched a "tariff war", who will be hurt the most?

On April 2, local time, US President Trump signed two executive orders on so-called "reciprocal tariffs" at the White House, announcing that the United States would set a 10% "minimum base tariff" on its trading partners and impose higher tariffs of up to 49% on certain trading partners. As soon as the news came out, various parties expressed their views and criticized the US hegemonic behavior.

On April 2, US President Trump displayed the signed executive order on the so-called "reciprocal tariffs" at the White House in Washington.

"China firmly opposes this and will resolutely take countermeasures to safeguard its own rights and interests." On the morning of the 3rd, a spokesperson for the Ministry of Commerce of China said that the US move violated international trade rules, seriously damaged the legitimate rights and interests of relevant parties, and was a typical unilateral bullying practice. At the regular press conference of the Chinese Ministry of Foreign Affairs on the same day, Foreign Ministry spokesperson Guo Jiakun urged the US to correct its wrong practices and negotiate with countries around the world, including China, to resolve economic and trade differences in an equal, respectful and mutually beneficial manner.

Experts said that the so-called "reciprocal tariffs" of the United States are not really "reciprocal". The hegemonic behavior of the United States can neither solve the problem of "liberating" the United States, but will drag the United States into the quagmire of economic recession. All countries should stick to their positions and jointly maintain the multilateral trading system with the WTO at its core; regional countries should establish a non-US free trade alliance and work together to resist US hegemony.

After all, there are no winners in a trade war and no way out of protectionism.

Are “reciprocal tariffs” really “reciprocal”?

At about 4 p.m. local time on April 2, U.S. President Trump took the podium in the Rose Garden of the White House and announced the details of the reciprocal tariff plan: a 10% base tariff will be imposed on all goods imported into the United States, and higher tariffs will be imposed on some of the largest trading partners. He claimed that the tariffs will not be completely equal, and the United States will charge these countries about half of the fees.

What exactly are Trump’s so-called “reciprocal tariffs”?

Chen Jiajun, deputy director of the Shanghai Institute of American Studies, explained that the so-called "reciprocal tariffs" means that the tariff rates imposed by the United States and its trading partners should be equal. Trump believes that other countries' tariffs on the United States are too high, while the tariffs imposed by the United States on other countries are relatively low. From Trump's perspective, this situation is not reciprocal.

In addition, Trump is also "angry" about the value-added tax system implemented by some countries.

This is because the United States does not impose VAT at the federal level, while more than 170 countries and regions around the world have implemented VAT systems, and the average VAT rate in EU countries is as high as 21.5%. "From Trump's perspective, this is also unfair to the United States. He hopes to reduce his perceived trade unfairness and imbalance through 'reciprocal tariffs'."

European Union flags are pictured outside the EU headquarters in Brussels, Belgium, on April 2.

According to Lü Xiang, an expert on American issues at the Chinese Academy of Social Sciences, although Trump claimed that the tariffs imposed on various countries were discounted, the problem is that no one knows how these tax rates are calculated. Even American economists believe that it is impossible to achieve true reciprocity because it requires calculating massive amounts of data, which is impossible. It is unknown how these so-called reciprocal tax rates were determined.

More importantly, this kind of reciprocity is not "equality" in the true sense. Trump said in his speech: "For countries and regions that treat us badly, we will calculate the total amount, including non-monetary barriers." According to the New York Times and The Hill, the "reciprocal tariff" measures will not only take into account the level of tariffs imposed by other countries on the United States, but also take into account subsidies provided to domestic industries, exchange rates, and any behavior that "the United States considers" to be unfair.

Despite the promises made in the speech, Trump and his staff may not be as confident as they appear. Lawrence Summers, an economist at Harvard University, said: "Tariffs are at the heart of the Trump administration's economic plan, and they are very worried about its impact on the U.S. stock market, so they had to announce the news after the market closed. This seems to be a strange strategy."

Guo Jiakun said that the US, under the guise of "reciprocity", has imposed additional tariffs on products exported to the US from many countries, including China, which seriously violates WTO rules and seriously damages the rules-based multilateral trading system. China firmly opposes this and will take necessary measures to firmly safeguard its legitimate interests.

Can the “reciprocal tariff” policy really “liberate” the United States?

According to Xinhua News Agency, during his speech, Trump took out a large sign with the words "reciprocal tariffs" from the Secretary of Commerce, which showed which countries would be the targets of Trump's "reciprocal" tariffs.

The French Federation of Wine and Spirits Exporters said on April 2 that the US policy of imposing so-called "reciprocal tariffs" on trading partners will lead to a reduction of at least 20% in French wine and spirits exports to the US.

This chart shows that the tariff on Japan is 24%, the tariff on the EU is 20%, the tariff on imports from Brazil and the UK is 10%, the tariff on imports from Switzerland is 31%, the tariff on imports from India is 26%, the tariff on imports from South Korea is 25%, and the tariff on imports from Indonesia is 32%...

"This result can be summed up in one sentence: 'worse than the worst'. It is unimaginable," said Lu Xiangru.

Chen Jiajun said that the countries and regions most affected by the "reciprocal tariffs" are undoubtedly Japan, South Korea, India and the European Union, which have close trade relations with the United States. These countries not only have relatively high tariff levels, but are also highly dependent on the United States. Once the "reciprocal tariffs" are levied, they will have a significant impact on the economies of these countries.

Some experts believe that some underdeveloped countries may be hit harder, even though they are not the focus of the "reciprocal tariff". Under existing trade rules, these underdeveloped countries are often allowed to impose higher tariffs on products imported from developed countries, while their exports to the United States can enjoy lower tariffs. Even a 10% tariff is too much for them to bear.

Although Trump has repeatedly claimed that April 2 will be the "Liberation Day" of the United States, economists and investors have warned that the "reciprocal tariff" policy will not only impact trading partners, but will also harm the interests of American consumers and drag down the United States' own economic growth. This means that the "reciprocal tariff" will eventually become a "boomerang" stabbing the United States.

"This is not the day of liberation, but the beginning of (US) decline," said Jeffries, the Democratic leader of the US House of Representatives. Obviously, his judgment is not without basis.

A forecast made by the Yale University Budget Lab in the United States shows that after the implementation of "reciprocal tariffs", if other countries do not take retaliatory measures, the price of personal consumption expenditure in the United States will rise by 1.7% in the short term, and the real GDP growth rate in 2025 will drop by 0.6 percentage points; if other countries take retaliatory measures, the increase in personal consumption expenditure prices in the United States will expand to 2.1%, and the real GDP growth rate will drop by 1 percentage point.

On March 31, Goldman Sachs Group warned that the probability of a U.S. recession in the next 12 months is 35%, much higher than the previous forecast of 20%. The American Broadcasting Corporation further pointed out, citing analysis, that the extent and duration of the U.S. government's tariff policy remain unclear, and if businesses and consumers begin to worry and reduce spending, the U.S. could fall into recession.

Traders work at the New York Stock Exchange in the United States on April 2.

In fact, the U.S. stock market fluctuated violently a few hours before Trump announced the tariff policy. After the details of the "reciprocal tariff" were announced, the Nasdaq index futures fell by 2.4%, and the S&P 500 index futures fell by 1.6%. Reuters said that this means that investors expect the stock market to fall sharply after opening on the 3rd.

According to Lu Xiang's analysis, the US stock market is likely to enter a "bear market" in the coming period, and US consumers will have to endure the pain of inflation. Even US Treasury Secretary Benson is not optimistic. He mentioned on many occasions that as the Trump administration implements spending cuts and tariff policies, the US economy will go through a "withdrawal period."

"This shows that the United States has anticipated this, but I believe that this 'withdrawal period' will be much more difficult than they imagined." Lu Xiang said that the dual pressures of the stock market and inflation will lead to a decline in U.S. investment and consumer confidence, which will in turn drive the U.S. economy towards recession and stagflation.

Can frequent tax increases really promote the “repatriation of manufacturing”?

In fact, since Trump began his second term, he has been wielding the "tariff stick". In his inaugural address on January 20, Trump promised to "impose tariffs on other countries to make American citizens rich" and reiterated his plan to establish an "External Revenue Service". Since then, he has repeatedly raised the "tariff banner" -

First, tariffs were imposed on Canada, Mexico and China, and then tariffs were imposed on imported commodities such as copper, wood and aluminum. Starting April 3, the United States will impose a 25% tariff on imported cars. The Financial Times reported that this means that the trade war initiated by the Trump administration has escalated significantly.

On April 2, a transport truck loaded with multiple cars (lower center) was driving on a road near the Mexico-US border (photo taken by a drone).

From targeting some countries to some commodities, and then to wielding the "tariff stick" across the world, under the leadership of Trump, the new round of trade war launched by the United States on its own will escalate again.

In the view of Bai Ming, a member of the Degree Committee of the Ministry of Commerce Research Institute, Trump's "reciprocal tariffs" have impacted the international industrial division of labor and industrial chain on which the world economy depends, making international cooperation full of uncertainty, leading to increased costs and reduced efficiency of international cooperation, and casting a shadow on the world economic recovery.

In Trump's "wishful thinking", imposing high tariffs on trading partners will not only fill the US "purse", but also promote "manufacturing repatriation", "make America rich again", and "jobs and factories will come back". However, Trump's hopes may be dashed.

Bai Ming said that it is obviously unrealistic to promote the return of manufacturing by imposing additional tariffs. This is not only because the return of manufacturing requires the simultaneous support of supporting industries, but also because the manufacturing industry formed by trade protectionism, even if it can solve some employment problems, will cause more problems due to the loss of resources and the distortion of the price system, which is likely to result in "hurting others 800 and hurting oneself 1,000".

Apart from taking countermeasures on their own, what else can countries do?

After the "reciprocal tariff" policy was implemented, many parties expressed their opposition.

Weber, chairman of the European People's Party, the largest political group in the European Parliament, said that for our American friends, today is not a "liberation day" but a "resentment day". Trump's tariff policy is not to defend fair trade, but to attack fair trade out of fear.

Italian Prime Minister Meroni said that the US's imposition of new tariffs on products imported from the EU is wrong and will not benefit either side. The trade war will only weaken the West. Canadian Prime Minister Carney said that Trump's comprehensive tariff policy will fundamentally change the global trade system. The policy will have a negative impact on the US economy, and its impact will intensify over time. Canada will announce countermeasures on the 3rd.

European Commission President Ursula von der Leyen made a statement in Samarkand, Uzbekistan, on April 3.

So, what else can countries do besides countermeasures?

"If all countries can stick to their positions and jointly maintain the multilateral trading system with the WTO at its core, the United States will be isolated. On the contrary, if countries compromise one by one, the United States' goal of reshaping the global trade pattern may be achieved." Chen Jiajun said that countries would rather bear the pressure brought by the global trade war in the short term than have any one compromise with the United States.

Chen Jiajun believes that once a country compromises, it may trigger a domino effect. This domino effect may lead countries to compromise with the United States, such as signing multilateral monetary agreements or building new trade mechanisms, which will have an adverse impact on global development and developing countries.

Experts analyzed that all countries should support and maintain the multilateral trade framework with the WTO at its core, which is the cornerstone of multilateral trade. At present, all countries should seize the trend of major trading countries in the world opposing the US tariff policy, and quickly realize the binding of interests among countries, support each other, and work together to resist the US trade hegemony.

"Currently, China, Japan, South Korea, the EU, and China and Europe are all deepening and restructuring their trade relations. This is undoubtedly a positive trend," said Chen Jiajun.

Lü Xiang is not too worried about this. In his opinion, such high "reciprocal tariffs" have basically interrupted many countries' trade with the United States. In the future, a non-US voluntary alliance will naturally form and mature rapidly in this year. Countries will automatically seek a non-US free trade treaty, which is a decision that is beneficial to all parties and related to survival.

"There are no winners in a trade war, and there is no way out for protectionism." A spokesperson for the Ministry of Commerce of China said that history has proven that raising tariffs cannot solve the United States' own problems. It not only harms the United States' own interests, but also endangers global economic development and the stability of the production and supply chain. China urges the United States to immediately cancel its unilateral tariff measures and properly resolve differences with its trading partners through equal dialogue.