6 days Ago By [email protected] (Gulf Times)
The significant shift in US trade policy is expected to have far-reaching implications for the global economy, affecting various sectors and countries differently. Following the earlier seismic changes to US trade policy, the White House on April 9 announced a 90-day pause on “reciprocal tariffs” for most countries with the exception of China. Already, there are fears that global trade could shrink by 3% as a result of the United States’ new tariff measures, which in the longer term, according to some economists, could reshape and boost as-yet untapped regional commercial links.
“Trade wars are extremely negative,” UN Secretary-General António Guterres said and noted that when it comes to trade wars, “nobody wins” and “everybody tends to lose”. The UN chief said he was “particularly worried” at the impact rising tariffs could have on vulnerable developing countries, warning that it could be “devastating”. “I sincerely hope that we will have no recession, because a recession will have dramatic consequences, especially for the poorest people in the world,” Guterres said.
His colleague, Pamela Coke-Hamilton, who is the head of the International Trade Centre (ITC), noted that exports from Mexico had already been “highly impacted” by earlier seismic changes to US trade policy. “Countries like Mexico, China and Thailand, but also countries in southern Africa are among the most affected, alongside the US itself,” she said. While the 90-day pause on the so-called reciprocal tariffs applies to imports from most countries and brings down rates to a still hefty 10%, tariffs on imports from China currently stand at 145%.
China, meanwhile, hiked its levies on imports of US goods to 125% hitting back at President Donald Trump’s decision to single out the world’s second largest economy for higher duties. Already, Mexico’s products for export have shifted away from markets such as the US, China, Europe and other Latin American countries to make “modest gains” instead in Canada, Brazil “and to a lesser extent, India”, the ITC chief insisted. Other countries have followed suit, including Vietnam, whose exports “are redirecting away from the US, Mexico and China”, while “increasing substantially” towards the EU, Republic of Korea and others, said Coke-Hamilton, whose UN specialised agency offers assistance to developing countries.
The problem for emerging economies is that they are less well equipped to “pivot” when faced with “instabilities”, the ITC chief explained, since they often lack the manufacturing diversity and ability to add value to raw commodities of more industrialised nations. Especially vulnerable trading partners of the US include Lesotho, Cambodia, Lao PDR, Madagascar and Myanmar that are “the most exposed”, she continued. Confirming that the World Trade Organisation (WTO) had estimated that commerce between China and the US could drop by up to 80% if the highly unusual situation continues, the ITC official pointed out that they constituted only “three per cent to four per cent of world trade.
So, there is 96% out there that is still trading and that will trade”. Nonetheless, the impact of the “indeterminate extension of 90 days on and on” has not been good for global commerce and “does not necessarily lend itself to stability”, Coke-Hamilton noted. “Irrespective of whether there is an extension, on and on, the fact that there is no stability, there is no predictability will affect trade and firms and decisions that are being made in real time.
” She added: “This would not be the first time that there have been tremors in the world economic system. We have seen it over the last 50 years in different dispensations. This one is probably a little harsher, a little more tremulous.
” The effects of these tariffs will not be uniform across the globe, according to Oxford Economics. Different countries and regions will experience varying levels of impact, with some economies more vulnerable due to their reliance on exports to the US. As nations begin to announce retaliatory measures, the landscape of global trade is poised for upheaval.
“If these tariffs remain in place, we can expect a substantial downgrade in growth forecasts for both the US and the global economy. While a recession may be avoided, world trade volumes are likely to suffer significantly, affecting economic performance through 2025 and beyond,” Oxford Economics noted. Related Story Late charge puts Morbidelli on top in Qatar GP practice Duhail keep title race alive with win over Arabi, Sadd beat Al Khor.
