It's not just a trade war... and it's just getting started

By Sergio Rodríguez Gelfenstein

We do not know the impact that the imposition of 10 percent tariffs on their exports by the Trump administration will have had on the inhabitants of Heard and McDonald Islands.

Most likely, we will never know, because the population of these territories is composed only of penguins, seals, turtles and seabirds. It has been more than ten years since the last time a human set foot on such rocky islets of 412 km² located halfway between Australia and Africa, whose economic activity based on the production of elephant seal oil and seal hunts ended in 1877.

This decision allows us – in some way – to understand the dimension of the recent measures taken by the United States in order to unleash a "trade war" against the world, which represents a real systemic hecatomb whose consequences are yet to be seen.

It does not seem easy to do this exercise, seasoned economists speak of "the end of globalization", "systemic catastrophe" or "destruction of the world trading system by a basic economic fallacy", according to the renowned professor of economics at Columbia University Jeffrey Sachs, who assures that Trump erroneously claims that the United States' trade deficit is due to the fact that the rest of the world has cheated him.



Another authoritative opinion, that of the American Economic Association, points out that "the formula used to set tariffs, published by the Office of the United States Trade Representative, has an error and lacks economic logic," assuring that "the calculation of tariffs has no support either in economic theory or in the legal framework of international trade." This prestigious institution considers that if the calculation errors were corrected, the country's economy could be boosted, favoring trade liberalization and reducing the risk of a possible recession.

So Trump's actions have no theoretical basis even in the economic doctrine of capitalism. However, it is not a matter of simplifying by saying that what is happening is total madness. I don't think so, I don't think that the world is suffering a strong systemic collapse motivated by a psychiatric dysfunction of the head of the administration of the most powerful country on the planet.

I think that everything obeys a coldly elaborated and calculated plan. Politics is a rational fact in which the subjective has a greater or lesser influence to the extent of the protagonism of the actors, whether they are individual or collective. But when the irrational exceeds the tangible, we are facing a situation that goes beyond the normal limits of analysis. Psychiatrists and psychologists would have to transform themselves into social scientists to explain what is happening.

It is not madness, but rather stupidity, stupidity, foolishness or whatever you want to call it. And these are not traits that characterize mental illness, but expressions of capitalist arrogance and arrogance as a response to a situation in which things are not going as desired, that is, in the same way that has been happening at least for the last 250 years or, many millennia before if we stick to the existence of class societies where the powerful have imposed will by force.

As if he were a monarch who holds all the powers, Trump overrides the legislative and judicial powers, disrupting with his practice the chimera of the balance of dominions assumed by liberal rhetoric. But just as Rome had Caligula and the Ottoman Empire Suleiman, Trump will fall by the very force of the system that he intends to overthrow in order to maximize the wealth of a minority sector of the American plutocracy.

In a supremacist attitude never before raised by another American president, Trump, acting even outside of a minimum rationality, assumes that his country has a power and a planetary mandate that cannot be questioned. His egomaniacal and arrogant mentality does not allow him to recognize mistakes, so he has surrounded himself with friends and family who praise him too much and always find him right.



Three months have passed since his arrival to the presidency of the United States, the world has not yet woken up from measuring the consequences of what it observes on the surface, to begin to glimpse that what is happening goes beyond a simple tremor that is felt in the crust to understand that in reality it is at the epicenter of a violent earthquake in the deepest part of the structure of the capitalist system. It is not just a matter of "making America great again", above all, what Trump is trying to do is to save the dollar, to save the hegemony of the United States and to save the capitalist system that is struggling with contradictions typical of its imperialist stage when the immeasurable growth of monopolies destroys the competition that is intrinsic to the system.

This is not new, already in the 70s of the last century a crisis of structural dimensions began to which an attempt was made to respond by implementing neoliberalism at a planetary level, assuming that it would be the panacea to overcome what was considered a superficial and cyclical impasse. This brought higher levels of exploitation of wage earners, violation of the most elementary norms and values of liberal democracy that had sustained the system for two centuries and the generation of conflicts and wars to activate the military industrial apparatus as a way out of the crisis.

However, since the measures taken over half a century have not aimed to solve the underlying problem, it has deepened to the point of becoming unmanageable. The U.S. deficit reached $59 billion in 1980. In that same year, the total federal debt amounted to $914 billion, an increase of $532 billion since 1970. On January 2, 2025, the debt limit was reinstated at $36.104 trillion, while the deficit was $2 trillion or seven percent of GDP. It is worth remembering that in that period Republican and Democratic presidents have governed, so it makes no sense to blame one or the other, much less take a position as if that were the cause of what is happening, while trying to hide the systemic crisis.

Sachs explains that "a country's trade deficit (or, more precisely, its current account deficit) does not indicate unfair trade practices by surplus countries. It indicates something else entirely. A current account deficit means that the deficit country spends more than it produces. That is, it saves less than it invests."

In the case of the United States, a way of life must be maintained based on chronic waste, especially by the ruling class and a middle class that spends, believing that it is immune to the ups and downs of the economy. Sachs also refers to this crisis as motivated by "chronically high budget deficits resulting from tax cuts for the rich, combined with trillions of dollars wasted on useless wars. The deficits are not the perfidy of Canada, Mexico and other countries that sell more to the United States than the United States sells to them."

The United States must sustain 800 military bases around the world, in which one million 240 thousand totally unproductive soldiers must be maintained by the State. It must also finance 11 aircraft carrier task forces that are in constant and unnecessary movement throughout the oceans of the planet. By the way, it is good to remember that the Houthis of Yemen, the poorest country in West Asia, have taken it upon themselves to demonstrate their total inefficiency. According to Trump, war in its warlike expression is not the best business for the United States, so he resorts to economic warfare thinking that this expedient can lead the United States to victory.

However, it should not be forgotten that, conceptually, "war is the continuation of politics by violent means" and that according to Lenin, "politics is the concentrated expression of the economy", so that everything that is happening has solely and exclusively economic causes, i.e. the economic crisis of capitalism and the United States.



To suppose – as Trump does – that this war is going to be won by increasing tariffs and that this is going to lead the countries of the world to eliminate their own, that companies are going to move ipso facto to the United States, that each country is not going to manipulate its currencies as a protective measure and that everyone is going to turn to buying American products... produced in the United States, is still a chimera of an arrogant spoiled brat.

Some of the consequences of these measures are already beginning to be perceived. The first to be hit is the people of the United States themselves. Some of the most renowned U.S. economists have announced that their country's trade deficit cannot be closed, on the contrary, they believe that the measures taken will impoverish American citizens and harm the rest of the world. Justin Wolfers, professor of economics at the University of Michigan, believes that the cost of living in his country will increase by six percent as companies pass on the additional costs to consumers. On the other hand, despite the contrary opinion of the administration's spokesmen, JPMorgan analysts predict that Trump's tariffs will most likely plunge the global economy into a recession this year.

In another area, it seems that the pro-Trump bloc in the U.S. Congress is beginning to crack. Four Republican senators joined Democrats in rejecting Trump's tariff policy in a key vote. This decision led the Senate to adopt a 51-48 resolution aimed at blocking the Trump administration's proposed tariffs on Canadian imports.

Likewise, in an unexpected response for Trump, China, which will now face a 125 percent tariff on its exports to the United States, has responded to every escalation by Washington. This could substantially increase the prices of several goods that Americans buy from China. Washington imported $439 billion in goods from China last year, the second main source of imports behind Mexico. It does not seem possible that the United States can win this "trade war" against China. Already during his last administration, the current president tried a conflict of similar characteristics, but much more limited, and lost it.

The evidence indicates that, beyond his promises and despite his overwhelming rhetoric and decisive decisions, Trump has not been able to occupy Greenland, has not been able to impose his plan for Gaza and did not stop the war in Ukraine in 24 hours. Europe, the Arab countries and Russia respectively, have prevented him from doing so. Nor has it been able to sell the 100,000 five-million-dollar visas it offered. Likewise, no one in the world has stopped calling the Gulf of Mexico by its name.



Even on the issue of deportations, it has been "more the noise than the cabuya". Without ceasing to consider that this has been done outside of international law and even of the institutions and laws of the United States itself, the Trump administration has not been able to fulfill what it has proposed. In this regard, my colleague and friend Antonio García reminds me that: "with respect to deportations, one aspect that has gone under the table is that Trump, in a period similar to what he has done so far in his term, has deported fewer people than Obama and Biden. Biden's deportations were a scandal compared to others. In 2024 alone they reached almost 300 thousand, [...] in a similar period it exceeded those carried out by Trump. So Trump's 'massive' deportations have been a failure. That is the reason why he has needed to make a scandal with the Tren de Aragua and the illegal deportations to El Salvador in order to hide his failure."
Similarly, it seems that no one has explained to Trump the real situation of the United States. According to figures provided by the Wofnon portal, when in 2008 the GDP per capita of the European Union was 37,203 dollars, that of the United States was 48,570, a difference of 11 thousand dollars. In 2023, that of the European Union was 41,422 while that of the United States reached 82,769 dollars, that is, double. Under these conditions, does anyone believe that a European businessman will move his factories to the United States where he has to pay double wages to produce the same as in Europe at half price or in Asia where he pays 20 percent?

Another element of analysis is the collapse of the stock markets, which have not stopped falling since the announcement of the imposition of tariffs by Trump. The figures have ranged from -2.77 percent of Japan's Nikkei index to Apple's nine percent fall.
The United States' hitherto allies, still subject to it by their subordination in NATO and by military bases that provide them with security and defense, have cried foul. From Germany to Australia, from Switzerland to Japan and from France to Sweden, they have spoken of "unrest" and "tariffs more harmful than expected." The government of Belgium, NATO's host country, said that the United States "will end up burning itself by dint of playing with matches"... Others, such as the presidents of Argentina and Ecuador, show full subordination by being content with the tariffs imposed on their countries because they are lower than those of others.

But what is perhaps most important and forward-looking is the reaction of the people of the United States. In demonstrations only compared to those that opposed the war in Vietnam in the 70s of the last century, and under the slogan "Hands off!", around 1,200 demonstrations were held in a single day, last Saturday, April 5, in the 50 states of the U.S. Union in which more than 150 social groups and around 500,000 citizens participated to express their repudiation and rejection of the measures taken by Trump that affect their economic situation and their labor and human rights.

This conflict that Trump has initiated is not circumstantial or short-term, it does not have a tactical character. It is a mistake to characterize and analyze it as such. No. It is structural, long-term and strategic in nature. What is at stake is the survival of capitalism on the one hand and the survival of humanity on the other... and it is just beginning.



Lenin already pointed this out in 1916: "The epoch of the highest stage of capitalism shows us that certain relations are being established among capitalist groups based on the economic division of the world; at the same time, and in connection with this, certain relations are growing between political groups, between states, on the basis of the territorial division of the world, of the struggle for the colonies, of the 'struggle for spheres of influence'.

From this more than 100 years ago, much has changed in the world, but the essence is the same. This is a systemic conflict, it is much more than a trade war or a geopolitical confrontation. Even one of the largest billionaires on the planet, the American investor and hedge fund manager Ray Dalio, says it, who today, April 9, in his account X stated that: "The most important thing to keep in mind is that we are seeing a classic rupture of the main monetary, political and geopolitical orders. This type of collapse occurs only once in a lifetime, but it has occurred many times in history when similar unsustainable conditions occurred."
Dalio added that we are witnessing the collapse of the geopolitical order because, according to him, "the era of U.S. dominance has ended as a result of Washington's unilateral approach that has been embodied in the trade war, geopolitical warfare, technological warfare and, in some cases, the military wars that it has led."

If someone asks why the United States attacks those who until recently were its allies, Lenin also has the answer: "... Intrinsic to imperialism is the rivalry between several great powers to seize hegemony, that is, to seize territories, not so much directly for themselves, but to weaken the adversary and undermine their hegemony..."
As I said before, this is just beginning...

RMH/SRG



Sergio Rodríguez Gelfenstein
Bachelor's degree in International Studies, Master's degree in International and Global Relations. PhD in Political Studies, he has an extensive and varied essay and journalistic work. To date he has published 17 books of his authorship and others coordinated as well as numerous articles and essays in almost 20 magazines in Venezuela, Mexico, Chile, Peru, Brazil, Argentina and the Dominican Republic among others, he has coordinated, compiled and participated in several collective publications in approximately 10 countries of Latin America and Europe, in addition to several small thematic books. His weekly opinion articles circulate in several newspapers and internet portals in about 15 countries in Latin America, Europe and Western Asia. He is an international columnist for the program Jugo de Limón hosted by journalist Sandra Russo on the Radio de las Madres de Plaza de Mayo. Buenos Aires. Argentina His published books are: • "When Fidel is not here", Vice-Rectorate Administrative - UCV, October 1993 • "The possibility of continuing to dream. The social sciences of Ibero-America on the threshold of the twenty-first century" (coordinator), Asturias, Spain. May 2000. • "Plan Colombia, globalization and hegemonic interests of the United States in Latin America" CDB Publications, Caracas, November 2000. • "Puerto Rico, a case of colonialism in a global world" Benemérita Universidad de Puebla. Mexico. 2003. • The Other Frontier Migration Policy in Chiapas (coord.) Government of the State of Chiapas. Mexico. 2006. • Paradiplomacy, the international relations of local governments (Coord.) H. Chamber of Deputies of Mexico LIX Legislature/ Government of the State of Chiapas. Mexico/ Miguel Ángel Porrúa, bookseller-publisher. Mexico City. 2006 • "Middle East and North Africa, a historical perspective", Ministry of People's Power for Communication and Information. Caracas. October 2011. • "The grass has caught fire throughout the continent. Stories of Our America". Center for Political and Social Studies of Latin America (CEPSAL) of the Universidad de los Andes (ULA). Mérida. Venezuela. 2012 • "The Time of Attempts. From the World Crisis to the CELAC Summit. File. Peru. August 2012. • "Missile Crisis. Cuba. October 1962". Claves Collection. Ediciones Correo del Orinoco. Caracas. Venezuela. January 2013. • "The balance of power. The reasons for the balance of the international system". Chilean edition. Ceibo Editions. Santiago de Chile. March 2014. And in Argentina. Editorial Biblos. Politeia Collection. Buenos Aires. August 2014 • "Colombia. Saying goodbye to war". Chilean edition. University of Chile Radio Press. Santiago de Chile. April 2016. • "Crazy World where I was born. An International System in Permanent Transformation". University of Chile Radio Press. Santiago de Chile. May 2017. • "The controversy between Bolívar and Irvine. The birth of Venezuela as an international actor". Vadell Hermanos Editores. Caracas, November 2018 • "China in the XXI Century: The Awakening of a Giant. Editions in Venezuela, Argentina, Chile, Panama, Dominican Republic, Mexico and Peru and in print in China and Puerto Rico. • "A monument among the most cultured nations. The treaties of Trujillo and the meeting between Bolívar and Morillo in Santa Ana", Monte Ávila. Caracas. Latin American Editors November 2020. • "Pandemic Imperialism. Latin America in the New Geopolitical Configuration" (Co-authoredwith Jorge Elbaum) Acercándonos Ediciones. Buenos Aires November 2020 • "From Bush to Trump. From the war on terrorism to the trade war" Acercándonos Ediciones. Buenos Aires. April 2021. • "Manuel Rodríguez en tres tiempos" (Comp.) América en Movimiento. Valparaiso. Chile. September 2020 • "The majestic march. The meeting between Bolívar and San Martín in Guayaquil. Monte Ávila. Caracas. Latin American Editors/ Approaching Editions. Buenos Aires. July 2022. • "NATO against the world. The conflict in Ukraine as an expression of the change of era". (Co-authored with Jorge Elbaum) Approaching Editions. Buenos Aires. September 2022 He has participated as a speaker in around 160 events national and international scientists and has also carried out work professor at the undergraduate and graduate level in Venezuela (Central University of Venezuela (UCV), Pedro Gual Diplomatic Academy, Institute of Advanced Studies (IDEA) and Venezuelan School of Planning), Mexico (University of Sciences and Arts of Chiapas) and China (University of Shanghai) to add to his research activity. He has received distinctions and decorations, including the 2016 National Journalism Award of Venezuela and the Aníbal Nazoa Award of the Necessary Journalism Movement. He was an advisor for the preparation of the Strategic Agenda for Foreign Policy of Ecuador 2009-2010 He was Coordinator of International Relations of the Government of Chiapas, Mexico, Director of International Relations of the Presidency of Venezuela, Advisor to the Presidency of Telesur and Ambassador of Venezuela in Nicaragua. Since March 2016 he has been a Visiting Scholar at the Center for Global Studies and the Graduate School of the University of Shanghai. China.

The Best Response to Tariff Wars? Declare Economic Independence

By Michael Shuman

April 11, 2025

Source: The Main Street Journal


Slow City Snail by Frits Ahlefeldt | Public Domain image via itoldya420.getarchive.net



Where I live, in Palm Springs, California, Canadian snowbirds are selling off their properties and angrily vowing never to return to the United States. Once back home, our northern neighbors are pulling Kentucky bourbon and other US goods from the shelves and liberating themselves from the tariff-obsessed lunatic in the Oval Office. The same story is playing out across the globe, including with close friends in Europe, the United Kingdom, and Australia, where the most immediate result of our self-inflicted trade wars is the collapse of Tesla sales. The poet Robert Frost once wrote that “good fences make good neighbors,” but he should have added that bad trade policies make friends into enemies.

I’ve already written about why tariffs are a form of dumb localization. Today, I want to focus on how communities, both inside the United States and around the world, should respond to the escalating global trade wars. My recommendation is simple: Inoculate your community from the increasing unpredictability of the global economy by becoming as local as possible, as fast as possible. The more you can produce your own goods and services from your own resource base, the less vulnerable you’ll be.

In case you haven’t been paying attention (or you’ve been reading too much Tom Friedman), localization is already sweeping the planet, at least in developed countries. Some 70-80% of US households spend money on services, which are almost always competitive and inexpensive locally. That percentage has steadily expanded over the past fifty years and is one of the principal drivers of localization. (It’s also a driver of the shrinking importance of manufacturing, but that’s another essay.)

The remaining goods we purchase are primarily nondurable goods like food, lumber, and building materials. Nondurable means that they don’t last. Most of the nondurable goods we consume every year tend to be heavy and have a low dollar value per unit weight (compared to, say, microchips). Food, for example, our biggest nondurable good purchase, is mostly water, and it doesn’t make sense to ship water in the form of soybeans halfway around the planet if you can produce the same item yourself. Only highly specialized water, like scotch whiskey, is worth the shipping and transaction costs. This helps explain why local food movements are thriving in every country. It’s increasingly cost-effective for communities to produce their own food for local consumption.

Let’s just pause on the surprising bottom line: About 90% of what we spend is on services and nondurable goods and can easily be produced locally (or regionally, if you live in a small town). If your community is not 90% self-reliant now, tariffs are your invitation to get started—yesterday.

The only things that are really hard to produce locally are durable goods, like cars, phones, and refrigerators. This is only about ten percent of our spending. Where these items are made will be dramatically affected by the tariff wars, and localization strategies for these items are more challenging. I’ll focus a future essay on durable goods, but for now, let’s just concede that these items still must be imported.

A realistic action goal for a community trying to survive tariffs is this: How can we move our economy more quickly toward the 90% self-reliance that’s economic, practical, and already happening? Here are ten distinct strategies your community can and should deploy to achieve this goal:

(1) Leakage Analysis – Look systematically at where money is leaving your economy right now, and calculate which nonlocal purchases are leading to the greatest job losses. Maybe it’s professional services? Or fresh vegetables? Whatever you find, these should become the focus of economic development efforts to grow new businesses or expand existing businesses to provide these goods and services locally. Shockingly, almost no economic development agency follows this very simple methodology for setting priorities. They instead waste their time, staff, and your money trying to attract outside companies—a strategy that’s a proven loser for economic development.

(2) Asset Analysis – Your community should make a thorough inventory of all underused assets. Do you have farmland with nothing growing on it? Public properties with zero economic activity? Is a large segment of your workforce unemployed, underemployed, or unhappily employed? Copenhagen created a City & Port Development Corporation to develop its municipal land into huge new sources of wealth. Its development projects, such as the North Harbor (Nordhavn), have created space for 40,000 residents and 40,000 workers. Revenue generated from the land development funded major infrastructure projects, including an expanded metro system, further boosting economic activity and connectivity.

(3) Circular Economies – A very specific kind of asset foolishly overlooked by most economic developers is what we mistakenly call waste—garbage, pollution, excess heat, and so forth. These waste products are potentially valuable inputs for new industries. South Australia has grown its regional economy and improved the state’s fiscal health by charging fees on all waste products. This has incentivized industries to clean up and become more efficient, which has created more jobs. Funds collected from waste producers are then used to promote technologies and business designs that accelerate circular practices.

(4) Vertical Integration – Leakage analysis should be performed not only by the community but also by its local companies. Zingerman’s Community of Businesses in Ann Arbor, Michigan, dramatically expanded its deli business by creating other local businesses—a bakery, a creamery, a farm, a coffee roastery—that supply goods to the deli. It now employs more than 700 people. Economic development should help every business in the community expand in this way. Nudging your businesses to vertically integrate—a few jobs here, a few jobs there—is a much more reliable way to grow the economy than bringing in an outside factory.

(5) Anchor Institutions – Vertical integration is particularly powerful if it is deployed by anchor institutions, the largest companies in your community that might be publicly owned or nonprofits. These could include public schools, universities, sports teams, and hospitals. These institutions, however, are often uninterested in vertically integrating, so Plan B is to get them to focus their purchasing power on local goods and services, which is a powerful lever of change. Push the local hospital to buy food from local farmers, or public schools to purchase desks from local furniture producers. In Preston, in the United Kingdom, local procurement led by anchor institutions created more than 1,600 jobs.

(6) Business Partnerships – Local businesses can strengthen themselves by establishing partnerships with other businesses. Local restaurants, for example, can market themselves collectively and leverage their collective buying power to get better deals from wholesalers. Business partnerships can also enable small businesses to achieve better economies of scale. Local hardware stores, which might not be able to compete on their own, have been able to succeed by being part of the global Ace Hardware Producer Cooperative. (These global networks of local businesses, by the way, offer clues on how local companies can cost-effectively produce durable goods.)

(7) Local Credit Networks – Strengthening local banks can strengthen local businesses that borrow from them. Most cities take surplus revenues from taxes, transfer payments from the national authorities, and put them into global financial instruments that do no good at home. The Bank of North Dakota, for more than 100 years, has taken these revenues and put them on deposit in local banks and credit unions, enhancing credit available to local businesses. It receives interest from the deposits, and now clears more than $100 million in annual profits, which it uses for various economic development initiatives. The population of North Dakota is under 800,000, which suggests that hundreds of cities in the world of similar or greater size could benefit from this strategy.

(8) Local Investment – This is what we promote every week at The Main Street Journal. Shifting the investment of residents from global companies to local ones can powerfully stimulate the local economy. And cost-effectively! In Nova Scotia, local pension funds called Community Economic Development Investment Funds (CEDIF) are enabling residents to reinvest in various local businesses. My favorite CEDIF, called FarmWorks, invests in local farms and food businesses. Residents receive tax credits, and, true, this costs the provincial government some lost revenue. But a recent study found that the per-job cost of these programs was just over $500—about a thousand-fold cheaper than the cost of paying incentives to attract a large outside company.

(9) Innovation Centers – Key to a successful local economy is innovation, which doesn’t happen naturally. It happens when economic developers mindfully connect entrepreneurs with capital, mentors, technical assistance, support networks, courses, incubators, and accelerators. These efforts do best when they focus on locally owned companies, because nonlocal companies will happily take the assistance and run. A great example of the virtues of localizing innovation support is the Mondragon Cooperatives in the Basque Region of Spain. Started in 1956, Mondragon has grown into the largest network of worker cooperatives in the world, now employing more than 70,000 people. Central to Mondragon’s early success was a school offering support services that helped transform talented workers into entrepreneurs, all within the cooperative system.

(10) Global Partnerships – Finally, consider the strategy of global learning. The new mantra for localization should be “innovate locally, share globally.” Every business design that helps a city become a little more self-reliant, whether in food, energy, or bicycles, should be shared and spread with every other community around the world. As this sharing network expands, communities will benefit from best practices across the world. This is already happening informally and formally through organizations like the International Council for Local Environmental Initiatives and COPx. These networks should be deepened and integrated with local economic development policy.

As my examples suggest, these ten localization strategies are not hypothetical. They are already being implemented somewhere on the planet and showing impressive results. They are generating income, wealth, and jobs far more cost-effectively than current economic development strategies to “attract and retain” outside global businesses. Unfortunately, no community is implementing even two or three of these strategies, let alone all ten.

So I say to my friends in Canada, in Australia, in France, in Japan, and everywhere else in the world: Don’t succumb to our Mad King’s trade wars. Use this crisis as an impetus to accelerate localization in your economy. The same advice applies to communities inside the United States. Let’s work together to find the business designs and strategies that collectively reduce our vulnerability. The faster we can take our local economies out of the line of international fire, the more secure we will be—and the more our peoples will prosper.



Michael Shuman is director of research for Cutting Edge Capital, director of research and economic development at the Business Alliance for Local Living Economies (BALLE), and a Fellow of Post Carbon Institute. He holds an AB with distinction in economics and international relations from Stanford University and a JD from Stanford Law School. He has led community-based economic-development efforts across the country and has authored or edited seven previous books, including The Small Mart Revolution: How Local Businesses Are Beating the Global Competition (2006) and Going Local: Creating Self-Reliant Communities in the Global Age (1998). In recent years, Michael has led community-based economic-development efforts in St. Lawrence County (NY), Hudson Valley (NY), Katahdin Region (ME), Martha’s Vineyard (MA), and Carbondale (CO), and served as a senior editor for the recently published Encyclopedia of Community. He has given an average of more than one invited talk per week for 25 years throughout the United States and the world.

 

European travelers avoid US, impacting tourism

chinadaily.com.cn | Updated: 2025-04-12 16:38

A tourist walks through the US Capitol Rotunda on Capitol Hill

 in Washington, DC, US, March 11, 2025. [Photo Agencies]

European travelers are shying away from visiting the US due to concerns over political and economic tensions, leading to a significant decline in international visitors and threatening lucrative air routes, according to a report by Financial Times.

In March, the number of western European visitors who spent at least one night in the US dropped by 17 percent compared to the previous year, said the report, quoting the International Trade Administration.

Specifically, travel from countries like Ireland, Norway and Germany witnessed a decline of over 20 percent, according to the report.

This downward trend is alarming for the US tourism sector, which contributes 2.5 percent to the nation's GDP.

Overall, the total count of overseas visitors to the US experienced a 12 percent year-on-year decrease in March, marking the most significant drop since March 2021.

"In just two months [Trump] has destroyed the reputation of the US, shown one way by diminished travel from the EU to the US," said the report, quoting Paul English, co-founder of travel website Kayak. "This is not only one more terrible blow to the US economy, it also represents a reputation damage that could take generations to repair."

Tariffs, Trump, and the Global South

Trump’s trade war is framed as a battle with China—but its fallout is exposing just how little power African economies have in a rigged global system.

By Abdoulaye Ndiaye, Faisal Ali 

April 11, 2025

Source: Africa is a Country


Image credit: wefaceforward.org



As of April 9, 2025, US President Donald Trump announced a 90-day pause on higher tariffs for over 75 countries, reducing them to a baseline 10% rate, while excluding China, which now faces a sharply increased tariff of 125%. This pause, set to expire on July 4, 2025, offers a temporary reprieve for many nations, allowing for negotiations and potentially stabilizing global markets, although the long-term implications and outcomes remain uncertain.

“Liberation Day” was how US President Donald Trump described it as he gleefully waved a bill introducing sweeping tariffs against his country’s global trading partners. “Taxpayers have been ripped off for more than 50 years,” he added, characterizing himself as America’s solemn defender. “But it is not going to happen anymore.” Despite widespread attempts to explain to Trump that it is American consumers who will have to absorb the cost of these new measures, the President has resolutely pressed ahead. One EU official said it is more an “inflation day” than a “liberation day.” Trump’s goal is ostensibly to restore manufacturing to the US, but as pointed out by the celebrated South Korean economist Ha-Joon Chang, you need a strategy to build an industry, not just punitive taxes for companies that want to sell things in your market. In just a few days, the tariffs have triggered instability in global stocks and sent the dollar plunging.

The measure has been met with widespread criticism from both friends and foes alike, neither of whom has been spared. David Lammy, the UK foreign secretary, suggested that Trump’s policy has taken the US back a century. The French President, Emmanuel Macron, described the tariffs as “brutal and unfounded.” Beijing, which exports a large number of goods to the US and faces a 104% tariff, warned that there would be no winners in a trade war and called on the US to stop “unilateral bullying.”

Even the world’s most important financial papers haven’t spared Trump. The Financial Times called it an “astonishing act of self-harm,” while the Wall Street Journal said the only real winner would be China’s leader, Xi Jinping, describing the tariffs as a “strategic gift.”

In Africa, the picture is somewhat more complex. Most countries have been hit with the lower end of the tariff spectrum, facing a 10% levy, but the highest have been borne by Lesotho (50%), Madagascar (47%), Mauritius (40%), and Botswana (38%). The measures also imperil the US’s existing preferential trade arrangements with select African countries through the African Growth and Opportunity Act (Agoa), which allows them to export goods to the US market on favorable terms. However, energy imports and key commodities have been exempted, which are Africa’s main contributions to the global economy. Agriculture has been more mixed.

Theoretically, that should shield these countries from the impact of these measures, but it isn’t that clear, argues Aboulaye Ndiaye, a professor at New York University, Stern School of Business. Ndiaye, a former US Federal Reserve economist, speaks to Geeska about the impact he expects the tariffs will have, what African countries can do to mitigate them, and why we need to rekindle more organic trade routes that can help support intra-African trade.

FA

When I went through the list of tariffs on Africa, I wondered whether it would have any impact on the continent, given that the US introduced exemptions on a long list of metals, oil, and gas—Africa’s primary exports. Libya, for example, got 31% but only really exports oil. Are we being too complacent if we say that the impact on African trade, for the most part, is somewhat exaggerated at this stage?

AN

That is a great question. So, if we look at it by looking at each country and say their primary exports are not affected, so that the practical impact is limited, that would definitely be a risky view. So, yes, it is likely that the immediate impact might not be that large in many places, but there will be secondary impacts because we face the world, and it will respond and retaliate, as we’re in a global trade war now. We know, for example, that stock markets are affected, and when capital gets scarce, Africa is one of the places where people pull the trigger first. There are also large oil exporters, like Angola, Nigeria, and Algeria, who rely a lot on oil, so the drop in global oil prices will have an impact on their businesses and budgets. But even this will help others who are energy importers—like Kenya and even Senegal.

As Africans, we need to think about how we will align and what our responses will be.

FA

Trump is basically complaining that the US has a negative trade balance with many countries around the world, which is one of the things he believes these tariffs will remedy. This means most of us sell more stuff to Americans than we buy and he thinks that is linked to the punitive tariffs many countries have on American goods. Will this help the US rebalance its trade with its African partners?

AN

It’s like me going to my barber with whom I have a negative trade balance because I basically import a service from him. And if, someday, I wanted to have a positive trade balance, I would add a tax on him cutting my hair and try to begin cutting his. That logic basically doesn’t make sense. So, the bottom line is we need to think about the long-term impact here. And I don’t mean a few months, but over the course of years. We shouldn’t take too drastic measures then, but we do need to seek alternatives.

FA

Most African countries also carry out the majority of their trade with China today, not the US. I think there are a handful of exceptions where the US is the main trade partner. But how much will that dampen the impact of these tariffs in your view across the continent?

AN

It will dampen the impact because it means they’ve diversified their trade partners, but they need to go further. Some commentators are now thinking about how we will do more trade among ourselves—among Africans, I mean—and increase intra-African trade. But we need to negotiate more bilateral trade agreements, country-specific ones, inside and outside Africa to help explore more alternatives. This includes the US, so they need to pick up the phone.

FA

Two countries have managed to avoid the tariffs altogether. Those being Somalia and Burkina Faso. Why were they able to dodge this bullet?

AN

Well, do you know which other country managed to dodge this? Russia. Most people got at least 10%. So, I think part of it is that these countries don’t have that large a trade volume with the US.

FA

Lesotho was flagged as a country facing a huge challenge because of Trump’s measure. They face a 50% tariff on a sector that accounts for around 20% of their trade. The country’s trade minister, Mokhethi Shelile, has said he’s worried about job loss and factory closures. How should other cases like Lesotho, of which there aren’t many, deal with this problem?

AN

For Lesotho 50% is huge. Factory closures are a major concern. But let me give an example from the first Trump term, where there was a trade war. Many Chinese companies just took their machines and factories from China, unscrewed everything, moved their equipment to Vietnam, where there were lower tariffs, and continued exporting to the US. Right? So, there are alternatives for these companies, they can shift their production. Lesotho, and countries like it, can also consider third countries where they might reroute their production.

Overall, the major concern for me is the cumulative impact of these tariffs and their repercussions at a time when the US has also cut foreign aid to African countries. The budgets of these countries are quite strained, and it is difficult for them to raise money through private markets. These are the vulnerabilities, cumulatively, that are currently the most challenging.

FA

Intra-African trade has long been a challenge across the continent. Almost all countries, with a few exceptions of those that export to South Africa, have extra-continental trade partners. Some efforts have been made in this regard, such as a continent-wide free trade area and regional free trade blocs like the East African Community. Why haven’t these efforts moved forward more quickly and altered the trade structure for African economies?

AN

As you’ve pointed out, there have been some ambitious initiatives. You have the East African bloc, the West African bloc, and the Southern African bloc, and they all have their own trade agreements. And now, you have the African Continental Free Trade Area. But, unfortunately, these are all paper tigers. They don’t contribute much. There are still many barriers to trade. The infrastructure that facilitates it isn’t well developed, there are cumbersome customs procedures, regulations are not consistent, and finally, there is still considerable political resistance to further integration.

We need a better understanding of history over its long durée to solve some of these issues, instead of just thinking about ourselves in terms of colonization or post-colonization. If we look at the trade agreements that make the most sense for African countries they are not the ones that have been constructed over the last 60 years in the postcolonial period. Rather, you would see more natural links. For example, me having this conversation with you, I’m from Senegal and you’re from Somalia—the link is closer than you think. Take Saudi Arabia, which is an important trade partner for your country; that path is also a well-travelled one for West Africans, like Mansa Musa, the most famous, who went from Mali to Hajj. There were many trans-Saharan and trans-Sahelian trade routes.

I don’t know if you’ve seen the film Io Capitano, which depicts this. It’s a movie about migration but it isn’t just a film showing people leaving Africa and arriving in Europe, it also shows the path. They go from Dakar in Senegal, passing through Mali, Niger, N’Djamena and end up in Libya where they face many difficulties. So all these parts of the world have become embroiled in terrorism and conflict, but if you look at the longer history, this path was one that was rich with trade and exchange, which was organic trade, that has been well-documented by historians. The point I’m making here is that if we apply the economic concept of persistence, which considers how existing patterns tend to become endogenous, these blocs we now have are not really grounded in these longer, more persistent patterns, these trade paths that have existed for years. People have traded gold, salt, and other things from the shores of Senegal along these migration routes, north to the Mediterranean and across the Sahel to the Red Sea.

The geographies where African affinities and trade patterns lie are different from these blocs we’ve established based on language and other considerations. These longer historical trade paths need more infrastructure and other things to support them and we need to re-think that.


Abdoulaye Ndiaye
Abdoulaye Ndiaye is Assistant Professor of Economics at NYU Stern.

New York Times concerned about trade war

Washington, Apr 11 (Prensa Latina) The New York Times today expressed in an extensive article its concern about the possible Monumental rupture that could emanate from the tariffs imposed by the United States on China.

April 11, 2025 | 

He sent the message that these discrepancies put the world economy on edge, and could further weaken the ties between the superpowers, with effects everywhere.

A dizzying escalation of tariffs unravels a decades-long trade relationship between the United States and China, jeopardizing the fate of the two superpowers and threatening to drag down the world economy.

The brinkmanship deployed by both countries already far exceeds the battles they fought during U.S. President Donald Trump's first term.

In 2018 and 2019, Trump raised tariffs on China for 14 months. Mostly, the most recent escalation unfolds in a matter of days, with levies that are much higher and apply to a wider group of goods.

On Wednesday, Trump responded to China's decision to match its 50 percent levy — a penalty for Beijing's countermeasure to an earlier U.S. tariff — with an additional levy, raising the rate on Chinese imports to at least 145 percent.

"We are approaching a monumental and disastrous rupture," said Arthur Ross director of the Asia Society in New York's Center for U.S.-China Relations. The fabric that we have so carefully woven over the past few decades is tearing apart.

A relationship that shaped the world economy in the 21st century is in jeopardy, he added.

For years, both sides benefited. The widespread use of Chinese factories by U.S. companies kept prices in check for U.S. consumers and boosted profits for the country's largest companies.

China obtained jobs and investments that lifted millions of families out of poverty. And as China's purchasing power grew, a gigantic and lucrative market opened up for American brands.

Economists predict that the split could tip the U.S. economy into recession.

At the same time, the Chinese economy is facing the prospect of a painful divorce from its largest trading partner, which buys more than $400 billion a year worth of goods from it.

MEM/RFC

How prepared is China for the tariff clash with the US?

Beijing (Prensa Latina) The trade war with the United States in 2018, Donald Trump's first term, took China by surprise, but now that tariffs have reached 145 percent, what is the outlook for the Asian giant?

April 11, 2025
By Isaura Diez
Chief China Correspondent
Prensa Latina


Premier Li Qiang stressed that Beijing is prepared to face uncertainties, while acknowledging that external shocks have put some pressure on the smooth functioning of the national economy.

The escalation in the tariff war unleashed by Trump has China in its sights, the Asian giant responded with similar tariffs to the United States and the phrase: "China does not want confrontations, but it is not afraid to fight".

Here's the current picture: Chinese goods imported from the U.S. are subject to up to 145 percent tariffs (125 percent added in recent days and 20 percent under the fentanyl excuse), while all goods from the U.S. face 125 percent upon arrival here.

The Asian giant's Customs has already notified that if the White House insists on the tariff game and raises these levies again, Beijing will not pay any more attention to it.

China's Commerce Ministry added 12 more U.S. companies to the export control list and filed a lawsuit under the World Trade Organization's (WTO) dispute settlement mechanism over the latest tariff measures.

"There are no winners in a trade war, protectionism has no future," the Chinese government said.

But he also stressed that if Washington insists on its hegemonic approach and wishes to wage a tariff war "or any kind of war," China "will accompany it to the end."

According to President Xi Jinping, it is normal for there to be differences between two different systems, however, he pointed out that there is a high complementarity between the two economies and that the successes of one should not be seen as a threat to the other.

The Ministry of Commerce of the Asian giant assured that the door is open to dialogue, but if the United States really wants to negotiate it must do so with respect and equal treatment.


WHILE THE NEGOTIATIONS ARE COMING IN...

In a meeting with business leaders and experts from the Asian giant, the prime minister stressed the importance of strengthening trust, working in unity and focusing on internal issues to turn crises into opportunities.

He said that this will promote constant and long-term economic development in the country.

In view of the changes in the environment, he stressed the need to implement more active and effective macroeconomic policies to address external uncertainties.

The head of government pointed out that it is essential to expand and strengthen the internal cycle and prioritize the expansion of domestic demand as a long-term strategy.

He proposed increasing efforts to stabilize employment, boost income growth and unlock the potential for services consumption.

In addition, he stressed the importance of promoting the integration of scientific and technological innovation with industrial innovation, with the aim of leading demand with a high-quality offer.

Li Qiang also stressed the need to boost the vitality of all business entities, implement supportive policies to solve problems such as payment delays, difficult access to financing and high costs.

"We must help companies overcome difficulties and provide them with a better development environment," he said.

Indeed, China is focused on expanding domestic demand, which is set to be the true locomotive of the national economy, but challenges such as the real estate crisis and a decline in consumer confidence remain.

On the other hand, while the United States is a leader in protectionism, Beijing underscored its commitment to comprehensive reform and the country's increasing opening-up.

The idea is to create a unified, fair and optimized business environment with international standards and tariff flexibilities to attract foreign investment.

According to Li, the country's economic operation during the first quarter continued its rebound and the national economy stands out for its many advantages, strong resilience and great potential.

Analysts point out among the advantages of the Asian giant that it has a complete industrial system and a large market made up of an expanding middle class.

CHINA LOOKS AROUND

The Foreign Ministry confirmed Xi's trip to Vietnam, Malaysia and Cambodia next week on state visits that will include meetings at the highest level.

The president's tour, scheduled to begin next Monday and conclude next Thursday, will be focused on strengthening Beijing's already excellent political, economic and social relations with its neighbors and occurs in the midst of the escalation of tariffs by the United States against those nations.

In fact, these three countries are part of the Association of Southeast Asian Nations (ASEAN), a bloc that has become the Asian giant's main trading partner.

What is remarkable is that just this week Xi Jinping called for strengthening and opening another chapter in regional relations: "We must focus on building a community of shared destiny with our neighbors," he emphasized at a high-level meeting.

The conference stressed that the countries around China are fundamental to China's development, national security and global diplomacy.

In addition, the meeting stressed that, although relations with neighboring countries are at their best since the modern era, they also face challenges arising from profound global changes.

To address them, the meeting proposed to work under the principles of the community of shared destiny and the Asian values of peace, cooperation and openness.

He also stressed that the Belt and Road Initiative will continue to be a key platform for boosting regional economic integration and development.

The attendees emphasized the need to consolidate strategic mutual trust, manage differences and deepen economic and security cooperation.

Asia is the natural area of greatest influence of the world's second economy and many of its experts point out the importance that Beijing attaches to its environment.

China recently underscored the potential for economic development in the region, which is forecast to grow by 4.5 percent by 2025 and increase its weight in the world economy to 48.6 percent.

EUROPE AND LATIN AMERICA ARE WELCOME

It is not only about Asia, the rapprochement with Europe is also notable these days, despite the fact that both sides have their own trade differences.

In fact, the official visit of the head of the Spanish government, Pedro Sánchez, to the Asian giant and his meeting with Xi is another step in the expansion of these ties.

During a meeting at the Diaoyutai guesthouse in the capital, the Asian leader stressed that the friendship between the two countries is based on common interests and long-term benefits.

In this regard, he urged both sides to consolidate mutual support on sovereignty issues and key concerns, and seize the opportunities offered by sectors such as renewable energy, high-tech manufacturing and smart cities.

On relations with the European Union (EU), Xi said China regards the bloc as an important pillar in a multipolar world.

He proposed working together to celebrate the 50th anniversary of diplomatic relations between Beijing and the EU with the aim of promoting a partnership based on peace, growth, reform and civilization, which he said was more relevant in the current circumstances.

Xi Jinping stressed that there is no winner in the tariff war and that going against the world is isolating oneself.

"For more than 70 years, China's development has always been based on self-reliance and hard work, never relying on anyone's gifts, let alone fearing any unreasonable repression," he stressed.

According to the president, regardless of how the external environment changes, the Asian giant will strengthen its confidence, maintain its resolve and focus on managing its own affairs well.

On the other hand, the president sent a letter of congratulations to the IX Summit of the Community of Latin American and Caribbean States (CELAC), recently held in Honduras, in which he ponders the ties between Beijing and that region.

The president stressed that these relations have withstood changes in the international scenario and are now in a new stage characterized by equality, innovation, openness and shared benefits.

According to Xi, both sides deepened political trust, expanded practical cooperation and strengthened cultural ties, which benefited the two peoples and established a model of South-South cooperation.

In addition, he reiterated the invitation to the member countries of the bloc to participate in the next China-CELAC Ministerial Forum, scheduled to be held in Beijing in the first half of the year.

The president urged to take advantage of this event to discuss development plans, strengthen joint cooperation and thus contribute to facing global challenges, reforming world governance and maintaining international peace and stability.

ARC/IDM

Xi: No winner in a tariff war

By CAO DESHENG | chinadaily.com.cn | Updated: 2025-04-11 

President Xi Jinping meets with Spanish Prime Minister Pedro Sanchez at the Diaoyutai State Guesthouse in Beijing on Friday. Liu bin / Xinhua

There are no winners in a tariff war and China is not afraid of unreasonable suppression, President Xi Jinping said on Friday, calling on the European Union to work with China to jointly resist unilateral bullying.

Xi made the remarks during a meeting in Beijing with Spanish Prime Minister Pedro Sanchez, the first time the Chinese leader has spoken in public on the tariff war launched by the United States on April 2.

There is no winner in a tariff war and going against the world ultimately results in self-isolation, Xi said.

He emphasized that China's development over the past 70 years and more has been through self-reliance and hard work, never on others' mercies, and it certainly does not fear unreasonable suppression.

Whatever changes may take place in the external environment, China will remain confident, resolute and focused on running its own affairs effectively, Xi said.

The president noted that both China and the EU are major world economies and staunch supporters of economic globalization and free trade, with their combined economic output accounting for over one-third of the global total, forming a deep economic interdependence.

China and the EU should fulfill their international responsibilities, jointly uphold the trend of economic globalization and the international trading environment, and resist unilateral bullying in order to safeguard their legitimate rights and interests, while upholding international fairness and justice and maintaining international rules and order, Xi said.

Xi's remarks came as the US tariff war with China escalates. The White House clarified on Thursday the 125 percent tariffs on Chinese imports announced on Wednesday were on top of a previous 20 percent, adding up to a whopping levy of 145 percent against China.

In response to a question about the US tariff hike, Foreign Ministry spokesman Lin Jian said on Friday that China's countermeasures are not only aimed at safeguarding its legitimate rights and interests, but also at upholding international rules and order. "In the face of US bullying and arrogance, there is no way forward through compromise and concession," Lin said at a regular news conference.

Sanchez was the first European leader to visit China following the US announcement of sweeping tariffs. The two-day official visit, starting on Thursday, marks his third trip to China within three years.

He told Xi that China is an important partner for the EU, and Spain consistently supports the stable development of EU-China relations.

The EU remains committed to open and free trade, is dedicated to upholding multilateralism and opposes unilateral tariff increases, Sanchez said, adding there are no winners in a trade war.

Faced with a complex and challenging international situation, Spain and the EU are willing to strengthen communication and cooperation with China, uphold the international trade order, and jointly cope with the challenges of climate change and poverty to safeguard the common interests of the international community, he said.

On Friday, Premier Li Qiang held talks with Sanchez. They witnessed the signing of an array of cooperation agreements in the economy, trade, and science and technology.

Both sides issued an action plan (2025-28) on strengthening their comprehensive strategic partnership. They agreed to enhance cooperation on the economy, trade, investment and technological innovation, and jointly support free trade and open cooperation and uphold multilateralism.

China and the EU have been closely coordinating on trade issues over the past few days.

Premier Li held a phone call with European Commission President Ursula von der Leyen on Tuesday, with both sides pledging to promote bilateral ties and uphold the multilateral trading system.

Commerce Minister Wang Wentao held a video meeting with European Commissioner for Trade and Economic Security Maros Sefcovic on Tuesday, during which the two sides agreed to promptly initiate consultations to thoroughly discuss market access-related issues.

Observers said that the US tariff war may provide an opportunity to bring Brussels and Beijing closer together and has given China the opportunity to position itself as a potentially more reliable partner for the EU.

Cui Hongjian, professor of the Academy of Regional and Global Governance at Beijing Foreign Studies University, said that it is imperative for China and the EU to jointly confront this challenge, as US unilateral policies would severely damage globalization and the multilateral trading system that underpins China-EU cooperation.

Trade wars to cost US dearly, warns Peterson Institute researcher

chinadaily.com.cn | Updated: 2025-04-11
 

Luo Jie/China Daily

The US economy will suffer significantly — more than China's— and in the event of a large-scale trade war between the two countries, the damage would only intensify if the United States continues to escalate tensions, warns Adam S. Posen, President of the Peterson Institute for International Economics, in an article published on Foreign Affairs on April 9.

According to Posen, the Trump administration believes it holds "what game theorists call escalation dominance over China and any other economy," with which it maintains a bilateral trade deficit.

However, he argues that this logic is fundamentally flawed: it is China, not the US, which holds escalation dominance in this trade war.

Posen explains that, to the extent that bilateral trade balances matter in determining the outcome of a trade war, the advantage lies with the surplus country, not the deficit one. China, the surplus country, is sacrificing sales, which amounts to lost revenue; the United States, the deficit country, is giving up access to goods and services it does not produce competitively—or in some cases, at all—domestically.

Given the US dependence on Chinese imports for vital goods (pharmaceutical stocks, cheap electronic chips, critical minerals), Posen cautions that it is "wildly reckless" to cut off trade before securing reliable alternatives. Doing so, he warns will result in the very kind of damage the administration claims to want to avoid. A severe supply shock from slashing or eliminating imports from China would trigger stagflation, Posen said.

Posen further criticizes the administration for making erratic policy decisions that effectively amount to massive tax increases and heightened uncertainty for manufacturers' supply chains. The likely result, he contends, will be reduced investment into the US and increased interest rates on national debt.

US should reflect on its flawed tariff policies

By Colin Speakman | chinadaily.com.cn | Updated: 2025-04-11 

Luo Jie/China Daily

Faced with an onslaught of tariffs from the US, nations are deliberating on their responses. The situation is complex because Trump's accusation of unfair treatment of the US by trading partners evidenced by other nations' trade surpluses is false.

Economists have asserted that trade imbalances often result from structural differences between countries and not from trade barriers. Consider two large economies of similar GDP with free trade - there should be no trade imbalances. Completely wrong. Say, in one, households have a high propensity to consume out of income and low savings - this is a fair description of the US where many homeowners use equity from rising property prices to refinance, making their home into an ATM. According to the US Federal Reserve, the personal savings rate was under 4 percent of income in 2024.

Assume on the other, citizens choose to save much more out of caution and are less happy to take on debt - they would consume much less of all goods including imports and run a trade surplus with the consumption-hungry country. No malicious treatment is involved. China is a good example of such a country with official household savings rates estimated at around 45 percent - hence highly likely to be a net exporter.

Trump has used the medical analogy of a sick patient enduring nasty medicine in order to be healthy in the future. The problem is that if the doctor has made an incorrect diagnosis, the wrong medicine will be given and the patient won't do well. This is the difficulty of responding to "reciprocal" tariffs which bear no relationship to real situations.

Trump has vigorously attacked the EU as "set up to harm the US", but in fact that large grouping of European nations may well have reduced the desire of individual members to seek export growth to America because there is a barrier-free large market locally that they can export to. It is true that the EU is a Customs Union that has a Common External Tariff but how often do we hear the true data on this, listening to Trump one would imagine it runs at 20 percent - official recent European Commission data shows that the true figure on average was just 1 percent tariff rates by both sides. Trump has made a huge distortion and fair-trading nations need to join together to support the true value of free trade.

Regional trading groups will need to enhance cooperation both within members and between them in order to reduce the importance of US exports to their economies - this will take time and will be constrained if a global recession results in the short term. Hence nations need to decide now how to de-rail Trump's tariff train.

China and the EU can lead the way and Chinese Premier Li Qiang earlier this week reached out to the European Commission President, Ursula von der Leyden, to urge both sides to maintain free and open trade. There is clearly an opportunity for more collaboration between these large trading entities.

There seem to be two main options, one of which Trump will likely present as a victory - the many smaller nations he claims are calling him to do a deal. It may make sense for a nation like Malaysia or Vietnam to offer to eliminate their limited tariffs that probably won't lead to large increases in US imports, reflecting the size of their economies, but equally, this won't reduce the balance of trade issue. Governments cannot make their citizens buy more from America, especially when its own citizens may now have a negative view of that country.

Governments can of course redirect their own spending, so possibly a country might re-equip its national airline with new Boeing jet orders - although these would be unfair to Airbus without competitive tendering. It would be a risky step as it is likely to alienate other, more reliable trading partners.

Trump's latest development is an offer to such nations that have not retaliated to pause and lower tariffs against them as a reward, but it remains to be seen what deals can be done.

For large economies and trading blocs, standing up to and the US with counter-measures sends a message that they will not be bullied by the US for baseless reasons. China has already done this and stated they will not hesitate to go further if needed. The US has not paused tariffs on China, nor on Canada and Mexico who have been retaliating.

On Wednesday the EU announced its members have agreed to impose retaliatory tariffs of Euro 21 billion on US imports with 25 percent tariffs on many selected goods. The European Commission stated that US tariffs are unjustified and damaging, causing economic harm to both sides as well as the global economy. This is entirely correct.

More needs to be done and it may be a forlorn hope, but we need to see other actors in the US, including opposition politicians, business leaders, respected academics and even some of Trump's own supporters, stand up and communicate to the American people that his policy is flawed, a false diagnosis and harmful to the US. It is too early to tell if Trump's sudden, temporary rollback of some tariffs is a sign of greater understanding.

Colin Speakman is an economist from the UK and an international educator specializing in China. The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.

Washington's trade policy fails basic math

By MASSOUD AMIN | China Daily | Updated: 2025-04-12 09

LI MIN/CHINA DAILY

US President Donald Trump has increased additional tariffs on Chinese goods up to 125 percent, with the total rate to 145 percent, while China has taken countermeasures including additional 125 percent duties on American imports.

The US' policy shift reflects a deeper abandonment of strategic tradecraft. The new tariff regime is not based on credible economic modeling, enforcement of fair trade rules, or reciprocity. Instead, it is built on a formula that converts bilateral trade deficits into tariff percentages. The logic is: the bigger the deficit, the bigger the punishment.

But this framework ignores the real causes of trade imbalance — currency flows, global sourcing, labor specialization, and consumer demand. Trade deficits are not acts of aggression. They are the consequence of structural choices and market dynamics.

The US has had trade deficits for decades. But trade deficits have not weakened the US economy — deficits have coexisted with strong job growth, innovation and investment. The US dollar's global reserve currency status and high domestic consumption ensure persistent imbalances in goods trade. Tariffs cannot rewrite these fundamentals. They can only distort prices, disrupt supply chains, and strain diplomatic relations.

The latest wave of tariffs is also incoherent in its application. Vietnam, which levies on average less than 10 percent tariffs on US goods, has been hit with a 46 percent US tariff. The European Union, whose trade barriers are comparable to or lower than the US', received a flat 20 percent tariff penalty. Even the remote, uninhabited Australian external territory of Heard and McDonald Islands — home only to penguins, seals and seabirds, with no permanent human settlement or meaningful exports — was slapped with a 10 percent tariff. These actions are not strategic; they are algorithmic and devoid of context or logic.

Markets have responded accordingly. Bond yields have surged as investors brace for inflation, instability and retaliation. Multinational companies are freezing investment, delaying orders, and seeking ways to circumvent US customs. Far from reinvigorating domestic manufacturing, this policy has increased uncertainty and capital flight.

The impact of the tariffs on American consumers will be swift and severe. Analysts estimate the tariffs will raise average household costs by $3,800 a year. The products affected include daily necessities: smartphones, laptops, HVAC systems, clothing, medical equipment, and baby formula. Some small businesses are already shutting down. A solar panel enterprise in Arizona and a clothing start-up in Pennsylvania have warned they cannot absorb the price shocks. These are not isolated cases but early signs of a broad contraction.

Diplomatically, the consequences are equally severe. China's retaliatory tariffs will apply to all US exports, including aircraft parts, energy products, semiconductors and agricultural products. Canada and Mexico have imposed 25 percent tariffs on US goods in response. The European Commission is weighing slapping digital taxes on US tech companies.

Thanks to the tariffs, key allies now view Washington as unpredictable and vindictive. The tariffs have not isolated Beijing. They are isolating the US.

The 2018 trade war showed the limits of broad tariffs. While US steel enjoyed temporary protection, the wider US economy suffered. Many jobs were lost in the US due to the tariffs and retaliatory barriers. Most companies that left China did not return to the US; instead, they shifted to Vietnam, Mexico or other lower-labor cost countries. Prices rose. Supply chains broke. The promised manufacturing revival never materialized.

History has another warning. The Smoot-Hawley Tariff Act of 1930 raised duties on more than 20,000 goods, and many countries responded by imposing tariffs on US goods. Between 1929 and 1934, global trade declined by 66 percent, deepening the Great Depression. While Smoot-Hawley did not directly cause World War II, it weakened the global economy and fueled the rise of authoritarian regimes. Trade wars do not stabilize, rather they destabilize, the economy. They do not solve, but create more, problems.

There is a better path. A true industrial strategy means investing in automation, skilled labor, resilient infrastructure and regional supply chains. It means targeting critical sectors — semiconductors, clean energy and biotechnology — through coordinated public-private partnerships. It means working with allies to enforce rules and raise standards, not acting alone in ways that provoke retaliation and undermine trust.

The economic frustrations behind tariff populism are legitimate. But the tools now being used are blunt, ineffective and destructive. Tariffs of this scale are not precision instruments. They are political theatrics imposed without strategic clarity.

If the US wishes to remain a global leader, it must act like one. For that, it needs consistency, coordination, and credibility. None of these can be achieved through news conference ultimatums or spreadsheet-driven punishment. The US needs a policy grounded in facts, not fury.

It's time to abandon the politics of pain. The world is too interconnected, and the stakes too high, to make improvization to masquerade as strategy. The US must stop turning trade deficits into targets and turn shared challenges into solutions.

The world does not need more math. It needs leadership. Let's get the mission right.

The author is an IEEE and ASME fellow, chairman and president of Energy Policy and Security Associates, and a professor emeritus at the University of Minnesota. The views don't necessarily reflect those of China Daily. 

US barbarism on international trade rules

China Daily | Updated: 2025-04-09 

Viral Chinese AI video of US sweatshop workers mocks Trump’s tariffs

Dawn.com Published April 10, 2025

A Chinese AI generated video mocking downcast American workers has been circulating on Chinese and US social media amid a growing tariff war between both countries.

The video shows overweight and over-worked, employees in a textiles factory, appearing exhausted and depressed as they stitch clothing on sewing machines.

Depicting the type of clothing manufacturing jobs that have been outsourced overseas in the past decades, the 32-second clip paints a dystopian picture of what the US working world might look like as a result of Donald Trump’s sweeping tariffs, according to The Independent.


The video depicting a depressed worker in a textile factory. — @axiang67 on TikTok

With the traditional Chinese music playing in the background of the video which ends with Trump’s campaign slogan, ’Make America Great Again, seems to be a direct swipe at the US president.

Much of the low-skilled workers’ jobs had been moved to China and other countries where labour is cheaper with the advent of mass globalisation over the past few decades.

Trump’s tariffs are based on an argument of encouraging American-based goods and returning to low-skilled jobs in the US to expand the job market for Americans and strengthen the country’s own businesses.

On Wednesday, Trump announced retaliatory tariffs on China to 125 per cent, after China imposed 84pc tariffs on US goods.

With more than a million views, the video has sparked further debate on social media about Trump’s ultimate goal in imposing stiff tariffs on China —and what the impact will be, The Independent reports.

“The goal is not to bring these low skilled jobs back to the US, but have China buy more US goods to offset a 300 billion [dollar trade deficit] and counting yearly trade imbalance,” said one.

“Low skilled manufacturing will never come back to the US. Highly skilled manufacturing won’t come to the US because we gutted education and don’t have the highly skilled workforce,” said another.

A third added: “America will become the poorest country in the world under Trump’s rule,” while a fourth mused: “iPhones are about to cost $5,000 and come with no charger.”

The TikTok video was reposted to X by user Damon Chen, who punctuated the video with a laughing-crying emoji, according to New York Post.

Howard Lutnick, Trump’s commerce secretary, during an interview, told CBS that “trillions” of dollars would flow into the US in the form of new investments in America’s manufacturing sector.

Pointing out that the construction of new factories “takes years” and would not reduce high costs for Americans in the short term, host Margaret Brennan asked: “You said that robots are going to fill those jobs. So those aren’t union worker jobs.”

“It’s automated factories,” Lutnick conceded, while promising that “Great American workers” would build and “operate” the factories brought to US shores in the coming months and years.