A responsible player, an anchor of stability and a defender of global order…Shrugging off all the expectations for an economic superpower, the United States, with its go-it-alone trade policy, is becoming a major risk to the global economy.
Ever since the U.S. administration vowed to “make America great again,” it has become increasingly confrontational in its trade agenda, raising tariffs and challenging existing global trading systems.
From threats of steel tariffs on Canada and Mexico to auto tariffs on Europe, the United States is stirring up trade disputes everywhere.
As it has been repeatedly proved, either by economics logic or policy outcomes, launching trade wars is of no avail to the stated goal of narrowing U.S. trade deficit.
Rather, U.S. businesses and households have been worried about the rising prices of production and consumer goods, and jobs of labor-intensive industries did not return to the U.S. as policymakers have wished.
The New York Federal Reserve estimates that the latest round of tariff hikes on Chinese goods will cost the typical U.S. household 831 U.S. dollars a year.
The prosperity of the global economy over the past decades has been built on the free flow of trade and investment. Disrupting the flow of trade between the world’s two largest economies will put global growth at risk.
But the U.S. administration refused to see this. In May, the United States unilaterally escalated trade tensions with China, rattling stock markets across the world and leaving countries in the global supply chain to gauge the negative impacts on economic growth.
It is common sense that trade frictions between the United States and China, whose combined contributions accounted for more than half of the global economic growth in 2018, will be amplified through the stretching supply chains, and eventually, the global economy will bear the cost.
Over the past decades, China, with its cheap labor and massive market, has gradually grown into the global manufacturing hub. The country is now the largest trade partner of more than 120 countries and regions.
In 2018, trade between China and the United States reached 633.5 billion U.S. dollars.
Any tinkering with trade policies in a single linkage will pass along the inter-related supply chain and incur collateral damages in unpredictable ways.
According to a survey by the European Union Chamber of Commerce in China, over one-third of the 585 companies doing businesses in the country found themselves negatively affected by tariff hikes started by the United States.
A UN report released Wednesday lowered the global growth forecast for 2019 and 2020 to 2.7 percent and 2.9 percent, respectively, citing trade disputes as major concerns.
The increasingly self-centered and short-sighted policies of the United States is putting its future and the global economic prospect at stake, driving the world into an “economic cold war” where nobody wins.
Even if the world economy can hold up through the rounds of trade frictions, the uncertainties the tensions cause will be long-lasting.
The United States is the world’s biggest economy; it should act like one. Enditem