Trump’s “Liberation Day” leaves the global trading system without a leader: “The era of globalization based on rules and free trade has ended.”
It is a real commercial war now.
Beijing responded to the “Liberation Day” tariff in Donald Trump on Friday, with its definitions slapped 34 % on all American imports, which is compatible with the new mutual tax rate imposed by the US President on Wednesday. The customs duties entered into force on April 10, one day after the Trump tariff.
The news rocked a already scary American market, as the S&P 500 sent almost 6 % less on Friday. Boeing – you Once a third is provided Of the 737 aircraft to China – it was shot down by more than 9 %. The Chinese companies listed in the United States also worked badly, as the Nasdaq Golden Dragon Index has decreased by about 9 %.
The collapse in the American market has followed a continuous decrease in Asia, which bore the “Tahrir Day” tariff in Trump. The Nikkei 225 index in Japan has decreased by 5.2 % in the two days trading since April 2. KOSPI in South Korea has decreased by 1.6 % during the same period. India fell 50 in India by 1.8 %. (Maybe fortunately, Chinese markets have been closed, including in Hong Kong, for the Chinhaming Festival, or “The Tomb Day”)
However, in addition to market reactions, China’s revenge is the possibility of defining the Trump tariff – despite allegations made by its supporters that countries either adapt to new taxes, or rush to the negotiating table to make concessions – will send the world to a long protective period.
“Instead of reforming the rules that some trading partners in the United States have benefited from their own interest, Trump chose to bomb the regime that governs international trade,” says Eswar Barasad, the first commercial professor at Cornell University. “The hatred has taken to trade with every major American trading partner, or to spare some allies or competitors.”
Now, the world faces a commercial system without a clear leader. Some countries will try to make concessions to the United States, while others will try to build new trade ties with other economies – and some now see an opportunity to benefit from relatively low tariff prices to take their share in the market from competitors.
“The era of globalization based on rules and free trade,” said Prime Minister in Singapore, Lawrence Wong, at a new stage, which is a more arbitrary, feverish and dangerous stage. Video statement It was released on Friday.
“International institutions have become weaker; international standards are eroded. More and more countries will work on a narrow self -interest and use strength or pressure to reach their path.”
How bad is the definitions?
The Trump administration has imposed a wide tariff, often much higher than the foundation line by 10 %, across the Asia Pacific region. Southeast Asia was more difficult, with Cambodia and Vietnam got 49 % and 46 %, respectively. China got a 34 % tariff, in addition to a 20 % tariff. Other East Asian economies, such as South Korea, Taiwan and Japan, have obtained a tariff raising between 24 % to 32 %. Only a handful in the Asia Pacific-Australia, New Zealand and Singapore-10 % foundation.
On Thursday, Goldman Sachs reduced the forecast of GDP throughout the Asia Pacific region, with Vietnam the greatest success, as it decreased to 5.6 %, a full percentage of 1.5 points lower than its previous drop. Taiwan, who got a 32 % tariff, also got great success in the bank’s expectations, as a percentage point decreased to 1.6 %.
HSBC estimated that 54 % of the customs tariff on China – the current level imposed by Trump – may withdraw the growth of GDP in China by 1.5 percentage points, down from its previous projection of 4.8 %.
Analysts do not expect the Pacific Asian countries to copy China in an attempt to counter the Trump tariff.
“Most other countries will resist the desire to escalate,” says James Lawrenceson, director of the Australian and alternative Institute at the University of Sydney. “Most countries in Asia are still from the point of view that open trade is good for prosperity and security as well.”
“The mood in Australia is one of the disappointment, but if the United States wants to engage in self -harm, the best strategy is to respond by engaging in self -harm as well.” (Australia said You will not decrease The new tariff is 10 %).
“South Korea is likely to offer more privileges,” such as participating in gas projects in Alaska or buying more American agricultural products, Ramon Pacheko Bardo, international relations expert and Korea expert at Kings College in London.
On Friday, US President Trump claimed that Vietnamese officials offered “reducing their customs tariffs to scratch.” Southeast Asian countries had previously offered reduced imports on American imports. Cambodia also offered the customs tariffs to a range of imports to 5 %, according to the local port Women of Khmer.
Economies $ 2.7 billion In helping to local manufacturers, it is harmed by the Trump tariff.
But the United States is likely to be able to restore itself to the economic precedence in the region, notes Van Jackson, the first lecturer in international relations at Victoria University in Wellington and author of the book ” The danger of competition: how major competition threatens peace and weakens democracy. “The United States has gradually isolated from Asian economic facts. In other words, America does not have the cards to do what it is trying to do,” he says.
What happens when no one leads trade?
For decades, the United States was at the center of the so -called bases -based trading system, and the support of institutions such as the World Trade Organization and the use of the huge consumer market. Although the American commitment to free trade was not just strong as its discourse suggested, “Tahrir’s Day”, through missile duties to an unprecedented level since 1930, has now left the global trade system without a leader.
“What the United States is doing now is not a reform,” said Prime Minister in Singapore.
This can be risky. Jackson says: “A world in which he abandons the international maintenance obligations for international maintenance and is in the position of power and pure wealth on himself and others.”
The rift lines have already started drawing them.
The Philippines, who got a 17 % tariff, sees relatively lenient, that “liberation day” is an opportunity to win the market share of its neighbors. Trade Minister Christina Rock in the United States said: Bloomberg television interview Friday morning. “Now that customs duties are less than [competitors like Thailand]Maybe we will have a stronger feature. “
Another possibility is that Asia adopts new trade relations, whether internally or with other advanced markets in Europe or the Middle East.
“In the face of registered access to the American markets and the weakest demand for consumption in the United States due to the Trump tariff, the rest of the world will look forward to diversifying the market, trade arrangements that exclude the United States, and other methods of storing itself against a global trade war looming on the horizon,” Brasad suggests.
This is true in China, he is already trying to build bonds with the global south. Dan Wang, director of the China team at the Eurasia Group, says that Beijing “encourages more companies to go out”, which may lead to a “strong in the short term of exports.” “Once factories are created abroad, they have to import machines to place these factories.”
Economists have already expressed concern about a tariff series in response to potential speculation of Chinese goods.
However, Wang believes that there will be no “global reaction” to Chinese goods. It suggests that “column industries” such as cars or green energy may stimulate a “strong reaction” from foreign governments. But in the end, “China is a major product. It provides goods that cannot be truly replaced in another country, or even a group of other countries.”
Beijing may win some glory by being a relative stronghold of stability, at least compared to Trump.
“In the short term, China can reap the fruits of low public relations and collect easy victories by appearing stable and reliable, simply by not doing what the United States does,” says Austin String, a professor of international relations at Hong Kong University.
This story was originally shown on Fortune.com
