Since the establishment of the multilateral trading system in 1947, economic crises have been frequent, but international trade has generally enjoyed a free and stable environment. However, amid the unprecedented changes of the century, the international trade order is facing unprecedented shocks, and international trade is about to enter its darkest hour, with the US government being the instigator.
On April 2, Eastern Time, the U.S. government issued an executive order stating that the United States is one of the most open economies in the world, but the current international trade system is based on flawed premises. Other countries and regions impose high tariffs on the United States, leading to a long-term massive trade deficit, the hollowing out of manufacturing, and shortages in critical industrial supply chains. As a result, the U.S. government announced that it would impose reciprocal tariffs on all trading partners, with tax rates ranging from 10% to 50%.
Following the announcement of the reciprocal tariff measures, the U.S.’s trading partners immediately responded, either by implementing countermeasures or by expressing their intention to sign bilateral trade agreements with the U.S., but their overall stance was to criticize the U.S. for arbitrarily imposing tariffs. WTO Director-General Ngozi Okonjo-Iweala issued a separate statement stating that reciprocal tariff measures would have a substantial impact on global trade and economic prospects, urging all parties to manage differences responsibly, engage in dialogue through the WTO framework, and seek cooperative solutions. IMF Managing Director Kristalina Georgieva also noted that, against the backdrop of sluggish global economic growth, such measures would pose significant risks to the outlook for global economic growth.
In my view, the United States’ reciprocal tariff policy has serious flaws: from an economic theory perspective, reciprocal tariffs undermine the fundamental theoretical basis of international trade, and it is precisely the comparative advantages of countries in terms of endowments, costs, and other factors that facilitate international trade and enhance the welfare levels of all nations. From the perspective of international relations, reciprocal tariffs undermine the foundation of international economic and trade cooperation, which is precisely what drives countries to integrate into economic globalization and achieve domestic economic development. From the historical perspective of the multilateral trade system, reciprocal tariffs disregard the outcomes of negotiations reached by countries over the past few decades, and it is precisely this gradual trade liberalization that has driven global economic development. From the perspective of government management, reducing fiscal deficits and revitalizing manufacturing should rely on domestic economic policy reforms, not on trade policies as a Band-Aid solution. As the world’s most powerful nation, the United States imposing the highest tariffs on the poorest and weakest countries like Laos and Cambodia is purely self-serving and lacks the image of a great power.
The multilateral trade system ensures that international trade operates in accordance with the rule of law and established rules, while reciprocal tariff measures are dragging international trade back to the “jungle era.” The implementation of reciprocal tariffs signifies that the United States is sliding toward a path of self-isolation and self-destruction, and will increasingly play the role of an active disruptor in the international economic and trade order. For other members, it is necessary to adapt to a WTO without U.S. participation, and even more so to unite with other countries, overcome difficulties together, and face challenges collectively.
