When the White House postponed the implementation of the – on Trump – mutual duties for the beginning of next month, many hoped for a less aggressive US trade policy.
It seemed that the government had taken its lesson from the “protest” of financial markets, that any duties would ultimately be much lower than those threatened by Donald Trump and that uncertainty would be mitigated.
But such a fate.
Last week, the Trump government announced the imposition of 50% on copper duties, a 50% horizontal tax on imports from Brazil and 25% duties on goods from Japan and South Korea, who are essentially moving to the level that the president was implied by April.
The US president also escalated his controversy with Canada, threatening to impose 35% duties on goods not subject to the US -Mexico -Canada trade agreement, and said he planned to impose new horizontal duties of 15% -20% in all other countries.
The view that this dramatic shift in economic policy will not cause a strong blow begins to seem utopian. The measures already announced by the White House increase the average US tariff rate (the so -called real rate) from 2% to 17%, that is to the highest level since the 1930s.
Worst of all, however, the new rate is no longer the reasonable limit: the Trump government seems to use duties as a weapon to achieve any goal.
It is recalled that the April announcement was cut off the principle of “reciprocity” – that is, the view that commercial partners should face each other’s exports in a similar way – and re -imprinted it claiming that the export and import balance, in each country, should be balanced.
In this light, those countries that have high trade surpluses with the US exploit America and have to undergo duties similar to their surplus.
This reasoning is not economically meaningful, but at least it has to do with trade.
On the contrary, the latest White House declarations show that US policy is no longer limited to it.
Brazil, for example, will be faced with 50% duties even though it imports more US goods than the US than it. In a letter sent to the government of Brasilia and announcing his decision, the US president points out that the aim of this move is to stop the trial of former Brazilian President Zaire Bolsonaru accused of attempting a coup.
Admittedly, this reckless use of duties is not a new practice.
The Trump government’s controversy with Canada (as well as with Mexico and China) is partly based on the accusations that the Ottawa government is not making much effort to stop the Fentanyl trade. Colombia was called upon to receive flights with deported immigrants, otherwise it would face similar sanctions.
The US government has also stated that it considers duties as the appropriate response to taxes that impose foreign countries on US businesses.
However, the threat of Trump against Brazil last week is a remarkable escalation of this practice – and not only because it essentially aligns the White House with a former country leader who is accused of trying to overthrow the election outcome. But why the government obviously uses duties as a means to intervene in the internal affairs of another country.
Ignoring the issue of the legality or not of these movements, the use of duties to promote trade -related goals is undoubtedly dangerous. In the short term, such bullying can bring concessions, but it is at risk of undermining America’s position in the world track and, ultimately, the role of the dollar as a safe haven for assets.
Knowing that any trade agreements can be overthrown at any time and for any reason, it is impossible to evaluate the prospects of trade, which will undoubtedly limit investment, growth rate and standard of living in the US.
Geopolitical fragmentation is not a good economic policy tool. It can only harm America’s interests. The White House must therefore review its policy before causing more damage.
And most importantly, it’s time for Republicans who serve in Congress – many of whom share these concerns – remember who really is their constitutional role and to raise their voice.
Source: Skai
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