Is reciprocal tariffs really good for the US?

In recent years, the reciprocal tariff policy proposed by the Trump administration has drawn widespread attention and controversy in the global trade arena. The core of this policy is that if another country imposes high tariffs on American products, the United States will impose tariffs of the same level on that country's products. This seemingly "tit-for-tat" strategy raises the question of whether it is truly beneficial for the United States.

I. Background and Motivations of the Reciprocal Tariff Policy

The Trump administration's implementation of the reciprocal tariff policy is driven by a complex array of motives. Firstly, Trump firmly believes that protectionist measures such as tariffs are crucial for addressing the economic problems of the United States. He holds that raising tariffs can protect domestic industries, reduce the trade deficit, and thereby promote economic growth and job creation. Secondly, the Trump administration seeks quick victories and deals to demonstrate its determination and ability to correct the problems left by previous administrations. Additionally, the Trump administration aims to enhance the United States' global competitive position by strengthening protectionist trade policies.

However, the implementation of this policy is set against a backdrop of complex geopolitical dynamics. As the United States increasingly intertwines national security and political agendas with free trade, protectionist sentiments have been on the rise. Moreover, the paralysis of the WTO dispute settlement mechanism has further weakened multilateral trade rules, providing fertile ground for the introduction of the reciprocal tariff policy.

II. Short-Term and Long-Term Impacts of the Reciprocal Tariff Policy

In the short term, the reciprocal tariff policy may indeed bring certain benefits to some manufacturing and agricultural states in the United States. These industries may be shielded from foreign competition due to trade protection, thereby promoting employment and economic growth to a certain extent. However, such benefits are temporary and come at the expense of other industries and consumers.

In the long run, the drawbacks of reciprocal tariff policies far outweigh the benefits. Firstly, it may trigger a global trade war, leading to a chain of retaliations among major trading entities and thereby undermining the stability of the global supply chain. This instability will increase the costs for businesses worldwide and heighten the uncertainty of the global economy. Secondly, reciprocal tariff policies may cause a significant rise in the inflation rate in the United States. The increase in tariffs will push up the prices of imported goods, which will then be passed on to consumers, leading to an increase in the cost of living. Moreover, the rise in inflation may prompt the Federal Reserve to maintain high interest rates, thereby suppressing the development of the US economy.

III. The Deep-seated Impact of Reciprocal Tariff Policies on the US Economy

Reciprocal tariff policies not only have negative impacts on the US economic growth and consumer interests but may also cause damage to the long-term development of US industries. Excessive protection may lead to insufficient innovation drive in domestic industries, while strategic industries such as semiconductors and new energy still require global cooperation. For instance, the manufacturing of chips is highly dependent on foreign enterprises such as TSMC and ASML. Reciprocal tariff policies may disrupt this global industrial chain cooperation, thereby affecting the technological competitiveness of the United States.

Furthermore, reciprocal tariff policies may also harm the US alliance relationships. If traditional allies such as the EU, Japan, and South Korea are included in the scope of tariff strikes, it may accelerate the process of "de-dollarization" or deepen their cooperation with China. The estrangement of these alliance relationships not only affects the international status of the United States but also poses a challenge to its influence in the global trade system.

IV. International Reactions to Reciprocal Tariff Policies

The implementation of reciprocal tariff policies has drawn extensive attention and reactions from the international community. Many countries have expressed concerns and dissatisfaction with the United States' unilateral trade policies, arguing that they undermine multilateral trade rules and exacerbate global economic uncertainties. Meanwhile, some countries have begun to seek ways to circumvent the impact of reciprocal tariffs through bilateral or regional agreements.

In conclusion, although reciprocal tariff policies may bring certain benefits to some industries in the United States in the short term, their drawbacks far outweigh the advantages in the long run. They not only harm the U.S. economic growth and consumer interests but may also have a significant negative impact on the long-term development of U.S. industries and its international standing. Therefore, the U.S. government should carefully weigh the pros and cons of reciprocal tariff policies and seek more reasonable and effective trade policies to safeguard the country's long-term interests. In the context of global economic integration, promoting trade liberalization and facilitation through enhanced international cooperation and adherence to multilateral trade rules is the right path to achieving mutual benefits.