**Washington**: President Trump’s recent executive order on reciprocal tariffs is provoking apprehension among experts regarding its adverse effects on the global economy, with predictions of increased consumer prices in the US and challenges to international trade dynamics, as China’s response underscores the tensions between the two nations.
In recent developments, US President Donald Trump has signed an executive order imposing reciprocal tariffs on various trading partners, most notably targeting China. This action has raised concerns among international experts regarding the implications of these protectionist measures for the global economy.
Carl Fey, a professor of strategy at BI Norwegian Business School, characterised the tariffs as a “lose-lose-lose situation,” stating that they “hurt the US, they hurt China and they hurt the rest of the world.” Fey pointed out that rather than enhancing competitiveness, these tariffs compel businesses to restructure their supply chains inefficiently, pushing nations to produce locally instead of leveraging regions that possess comparative advantages. He further asserted that this move would ultimately result in the “world accomplishing less as a whole.”
The Chinese government responded with a statement denouncing what it described as the US’s abuse of tariffs. It contended that the US, under the pretext of seeking “reciprocity” and “fairness,” is engaging in zero-sum strategies aimed at promoting “America First” and perpetuating the notion of “American exceptionalism.” This, the Chinese authorities argued, undermines the existing international economic framework and trade order.
The ramifications of these tariffs extend to American households and the overall economy. A study conducted by Yale University suggested that if trading partners retaliate, prices for personal consumption expenditures in the US could increase by 2.1 per cent, translating to an estimated loss of between $2,700 and $3,400 per household on average. Furthermore, the study predicted a decrease in US real GDP growth by 1 percentage point by the year 2025.
Despite the growing uncertainty arising from aggressive unilateral trade policies, experts maintain optimism about China’s economic durability and potential for long-term growth. Denis Depoux, global managing director at the consultancy Roland Berger, dismissed fears of an impending “economic collapse” in China, highlighting the country’s robust economic value and advancements in technology.
Depoux noted the transformation of China from a manufacturing enclave to a significant global technological player. He remarked, “China has invested heavily in R&D, and while its companies are still focused largely on the domestic market, the next step is for them to expand globally.” He suggested a shift from a “Made in China” to a “Designed in China” paradigm, encouraging Chinese businesses to invest abroad and engage with local markets to solidify their status as multinational entities.
He also acknowledged the growing appeal of China as a destination for foreign investment, particularly in technology sectors, driven by its innovative and tech-savvy population. Depoux expressed concerns regarding the disruptions caused by tariffs and restrictive trade policies but remained hopeful about the evolution of globalization. He stated, “Efficient global supply chains, driven by comparative advantages, create prosperity. Protectionism only hampers this process.”
Guy Ryder, UN under-secretary-general for policy, echoed the need for open trade amidst the risks of fragmentation in global supply chains. Ryder asserted that “many international organizations oppose policies like those of US President Donald Trump” and expressed confidence that the system of open trade is still viable. He commended China’s steadfast support for multilateralism, highlighting the necessity for collaborative international efforts in addressing current global challenges. “No country — not even the largest — can solve today’s global problems alone,” Ryder added, underlining the importance of China’s commitment during these tumultuous times.
Source: Noah Wire Services
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