It may be a negotiating tactic or rhetoric on the part of US President Donald Trump but his move to punish allies and China with punitive tariffs and threats to further impose import duties on a wider scale has already started a global trade war.
The White House last week announced harsh 25-percent tariffs on Chinese imports as a counter measure to the theft of American intellectual property and technology. Trump senior economic aide Peter Navarro declared that China had more to lose from a trade war because it shipped more goods to the US, adding that the US government was acting “to defend the crown jewels of American technology from China’s aggressive behavior.”
The US tariffs were in addition to those imposed earlier on Chinese steel and aluminum that became effective in late March, prompting Beijing to slap punitive duties on 128 American goods, including pork, wine, whisky and jeans in retaliation.
The European Union, meanwhile, is imposing retaliatory tariffs against metals duties slapped by Trump effective tomorrow. Europe claimed that the “unilateral and unjustified decision of the US to impose steel and aluminum tariffs on the EU means that we are left with no other choice.”
Beijing has warned it will retaliate in kind to Trump’s latest threat of tariffs on hundreds of billions of dollars’ worth of Chinese goods, or much of its exports to the US.
The tit for tat between the world’s biggest economies, fueled by Trump’s campaign promise on trade, has already unnerved the global financial markets, including those of the Philippines. World stock prices have reeled from the standoff after weeks of fruitless talks on fears that a full-blown trade war will curb global economic growth.
Market traders have assessed that increased tariffs will reduce the shipments of goods from US, China and Europe and eventually restrict production from the three continents. The lower output will naturally mean less jobs and begin a worldwide recession.
The Philippines, too, will be a casualty of the global trade war that reduces consumption from the three major economies. With less demand from the US, China and Europe, Philippine exports will suffer.
The Philippines, thus, must prepare for the global trade war. It must seek other alternative markets to soften the blow from the warring trading partners and secure assurance from them that Philippine products are spared from the business conflict.