Nations dismayed over 'reciprocal' US tariffs

BANGKOK, April 4 ------ Sweeping new tariffs announced by US President Donald Trump provoked dismay, threats of countermeasures, and calls for further negotiations to make trade rules fairer. But responses were measured, highlighting a lack of appetite among key trading partners for an outright trade war with the world's biggest economy. Trump said the import taxes, ranging from 10 percent to 49 percent, would do to US trading partners what they have long done to the US. He maintains they will draw factories and jobs back to the United States. “Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.” 

Trump's announcement of a new 20 percent tariff on the European Union drew a sharp rebuke from European Commission President Ursula von der Leyen, who said it was a “major blow to the world economy.” “The consequences will be dire for millions of people around the globe,” von der Leyen said. Groceries, transport, and medicines will cost more, she said while visiting Uzbekistan, “And this is hurting, in particular, the most vulnerable citizens.” 

Von der Leyen acknowledged that the world trading system has “serious deficiencies” and said the EU was ready to negotiate with the US but also was prepared to respond with countermeasures. 

Nobody wants a trade war 

The British government said the United States remains the UK’s “closest ally," and Business Secretary Jonathan Reynolds said the UK hoped to strike a trade deal to “mitigate the impact” of the 10 percent tariffs on British goods. “Nobody wants a trade war and our intention remains to secure a deal," said Reynolds. "But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.” 

Japan, America's closest ally in Asia, plans to closely analyze the US tariffs and their impact, Chief Cabinet Secretary Yoshimasa Hayashi said, while refraining from talk of retaliation. But he said the moves would have a big impact on relations with the US. Italy’s conservative Premier Giorgia Meloni said the higher tariffs would benefit neither side. “We will do everything we can to work towards an agreement with the United States, with the aim of avoiding a trade war that would inevitably weaken the West in favor of other global players,” Meloni said in a Facebook post. Brazil, hit with a 10 percent tariff, said it was considering appealing to the World Trade Organization. Its congress unanimously passed a bill to allow retaliation for any tariffs on Brazilian goods. 

Blow to the world economy 

Financial markets were jolted, with US stock futures down by as much as three percent early Thursday and a 3.1 percent drop in Tokyo’s benchmark leading losses in Asia. Oil prices briefly sank more than $2 a barrel. “The magnitude of the rollout – both in scale and speed – wasn’t just aggressive; it was a full-throttle macro disruption,” Stephen Innes of SPI Asset Management said in a commentary. While the longer-term ramifications could encompass a dismantling of supply chains built up over decades, a more immediate concern is the higher risk of recession.  

“The (average) US tariff rate on all imports is now around 22 percent, from 2.5 percent in 2024. That rate was last seen around 1910," Olu Sonola, Fitch Ratings’ head of US Economic Research, said in a report. "This is a game changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” Sonola said. The burden falls heaviest on Asia-Pacific nations, with the highest tariffs for impoverished, financially precarious countries like Laos at a 48 percent tariff, Cambodia at 49 percent, and Myanmar at 44 percent. 

Minimize damage 

Asian countries that are among the biggest exporters to the US pledged to act fast to support automakers and other businesses likely to be affected. 

South Korean Prime Minister Han Duck-soo told officials to work with business groups to analyze the impact of the new 25 percent tariff to “minimize damage,” the trade ministry said. 

China's commerce ministry said Beijing would “resolutely take countermeasures to safeguard its own rights and interests,” without saying exactly what it might do. With earlier rounds of tariffs China reacted by imposing higher duties on US exports of farm products, while limiting exports of minerals used for high-tech industries such as electric vehicles. “China urges the United States to immediately cancel its unilateral tariff measures and properly resolve differences with its trading partners through equal dialogue,” it said. 

Mexican President Claudia Sheinbaum said she would wait to see how Trump’s announcement will affect Mexico, which like Canada was spared for goods already qualified under their free trade agreement with the United States, though previously announced 25 percent tariffs on auto imports took effect Thursday. “It’s not a question of if you impose tariffs on me, I’m going to impose tariffs on you,” she said Wednesday morning. “Our interest is in strengthening the Mexican economy.” 

Canada had imposed retaliatory tariffs in response to the 25 percent tariffs that Trump tied to the trafficking of fentanyl. The European Union, in response to the steel and aluminum tariffs, has imposed taxes on 26 billion euros’ worth ($28 billion) of US goods, including bourbon, prompting Trump to threaten a 200 percent tariff on European alcohol. 

No basis in logic 

Some countries took issue with the White House's calculations. Australian Prime Minister Anthony Albanese said the tariffs were totally unwarranted, but Australia will not retaliate. “President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10 percent,” said Albanese. The US and Australia have a free trade agreement and the US has a $2-to-$1 trade surplus with Australia. “This is not the act of a friend.” Trump said the United States bought $3 billion of Australian beef last year, but Australia would not accept US beef imports. Albanese said the ban on raw US beef was for biosecurity reasons. 

A 29 percent tariff imposed on the tiny South Pacific outpost of Norfolk Island came as a shock. The Australian territory has a population of around 2,000 people and the economy revolves around tourism. “To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, told the AP Thursday. “We don’t charge tariffs on anything. I can’t think of any non-tariff barriers that would be in place either, so we’re scratching our heads here.” “We don’t have a 20 percent tariff rate,” said New Zealand's Trade Minister Todd McClay. But he said New Zealand did not intend to retaliate. "That would put up prices on New Zealand consumers and it would be inflationary,” he said. 

Little to gain 

As Trump read the list of countries that would be targeted Wednesday, he repeatedly said he didn’t blame them for the trade barriers they imposed to protect their own nations’ businesses. “But we’re doing the same thing right now,” he said. “In the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral economic surrender,” Trump said. Speaking from a business forum in India, Chilean President Gabriel Boric warned that such measures challenge “principles that govern international trade.” 

Colombian President Gustavo Petro, who has clashed with Trump before, said via X that the tariffs marked a milestone: “Today the neoliberalism that proclaimed free-trade policies all over the world has died.” Analysts say there’s little to be gained from an all-out trade war, neither in the United States or in other countries. “If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies. “On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.” 

Source: mb.com.ph