BEIJING, April 5 (Xinhua) -- The U.S. administration, with its erratic and extensive protectionist trade agenda, is throwing sand in the gears of the world's economy, further dragging down already sluggish global growth and weakening the fragile trade circle.
In the latest move, the U.S. administration announced a plan on the so-called "reciprocal tariffs," imposing a 10-percent "minimum baseline tariff" and higher rates on certain trading partners, triggering widespread opposition and a sell-off in the global financial markets.
Economists and analysts expect that the U.S. and global economies will face increasingly detrimental and potentially irreversible effects, which may include global supply chain disruptions, reduced cross-border trade and capital flows, and a breakdown in the rule-based global economic and trade landscape.
INDUCING ECONOMIC TURMOIL
Economists have widely criticized the U.S. trade agenda, warning that it makes no sense economically and will "backfire" on its own economy while choking global growth.
"It's erratic, unpredictable, ill-focused, and much of it has nothing to do with trade policy," said Martin Wolf, chief economics commentator at the Financial Times.
"The main effects of these policies now are creating wild uncertainty," said Wolf, highlighting that the U.S. tariffs and their unpredictable roll-out stifle investment plans, hamper the formation of trade deals and ultimately lead to a general malaise in economic activity.
As the tariff uncertainties loom large, consumer confidence in the United States has plummeted to its lowest level since January 2021, while the U.S. stock market posted the worst quarterly performance in more than two years during the January-March period.
The outlook for the U.S. economy is becoming increasingly grim. Last month, the Organization for Economic Cooperation and Development (OECD) revised down its U.S. growth forecasts, projecting its growth rate to slow from 2.8 percent in 2024 to 2.2 percent in 2025 and 1.6 percent in 2026.
China International Capital Corporation, an investment bank, expected the U.S. imposing "reciprocal tariffs" on top of existing tariffs to further push up the U.S. inflation and trim its real GDP growth rate by 1.3 percentage points.
The ramifications of the U.S. trade policies extend worldwide. Fitch Ratings, joining a growing list of prominent forecasters, lowered its expectations for global economic growth last month, underscoring mounting concerns over the instability in the U.S. economy and its trade policies.
The credit rating agency expected the world's economic growth to slow to 2.3 percent in 2025, down from 2.9 percent in 2024, and then slide further to 2.2 percent in 2026.
The United Nations Trade and Development, in its latest Global Trade Update in March, warned that risks, including protectionist policies and trade disputes, would disrupt global trade in the future.
ERODING FOUNDATION OF TRADING SYSTEM
Analysts warned that the U.S. trade agenda, driven by the "America First" ideology and an increasingly protectionist stance, has upended the multilateral, rule-based trading system that has underpinned global stability for decades.
In its pursuit of "putting America First on trade," the White House has resorted to the so-called "reciprocal tariffs" as a means to reduce its trade deficit in goods.
But in reality, the United States is a "big winner" although it portrays itself as a victim in global trade. The World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala pointed out that the United States runs a services trade surplus with most major economies while generating 80 percent of its GDP and employment from services.
The United States intends to ramp up tariff collection to boost government revenue, and these tariffs may also be used as bargaining chips in bilateral or broader trade negotiations, said Zhao Zhijiang, a researcher of Anbound, an independent think tank based in Beijing.
The U.S. administration has pivoted its trade strategy from win-win cooperation towards a zero-sum game. By politicizing and weaponizing trade policies, it seeks to redefine the concept of "fairness" whenever it feels necessary to align with its political needs and domestic agendas, said Dong Yan, a researcher at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.
Such actions will not resolve the underlying economic challenges facing the United States, but instead risk intensifying trade tensions and heightening global economic uncertainty, Dong said.
The more far-reaching perils of the U.S. trade policies would lie in its threat to the existing international trade order, which is based on comprehensive reciprocity, non-discrimination, and multilateral consultations to resolve trade disputes, analysts said.
The "reciprocal tariffs" stress solving bilateral or multilateral trade disputes through unilateral, coercive measures, and this blatantly violates the WTO principles of multilateral and comprehensive reciprocity, Dong said.
As a result, the resolution of trade disputes would lose its rule-based foundation. "Instead of being resolved through multilateral negotiations, it would devolve into a contest of national strengths," she said.
Calling the course that the United States is pursuing "economically wrong and geopolitically dangerous," U.S. economist Jeffrey Sachs said the country should "want a world in which prosperity is very widely shared," instead of a world in which it alone is prosperous and everyone else is poor.■
