RISK AND UNCERTAINTY OF TRADING WITH THE US
But the memo released by Mr Trump goes further to bundle five different categories into a final “tariff”: Current level of tariffs applied to US goods; unfair taxes imposed (like value-added tax and goods and services tax); costs to US businesses and consumers of other country’s policies, subsidies and exchange rates; and any other practices the US trade representative’s office deems unfair.
All of these points are to be tackled in a sweeping report delivered on Apr 1, paving the way for new reciprocal tariffs to be applied starting as soon as Apr 2.
Assessing the consequences of this new policy is nearly impossible beyond broad points. The US has upended the current trading system that has existed since the 1940s. It is clear the US is not interested in anything but unilateral trade policy, leaving the rest of the world to decide whether to abandon economic integration or follow America’s example.
The concept of reciprocal tariffs has injected maximum uncertainty into trade with the United States. There is simply no way to know, in advance, the final tariff any product from any trade partner might face at the border.
It may be that individual countries, sectors or firms never have a reciprocal tariff applied. Or it may be that deft negotiations will not be sufficient to stave off new charges.
Asia has a long history of trade engagement and economic openness, which has powered domestic economic growth. This is potentially at risk in the wake of Mr Trump’s latest actions. A new roulette wheel of tariff applications will be very challenging to navigate.
Deborah Elms is Head of Trade Policy at Hinrich Foundation and Founder of the Asian Trade Centre.
