Trump's aggressive reciprocal tariff may backfire

Donald Trump's aggressive tariff policy smacks of a could-not-care-less attitude. In a way he has antagonised the rest of the world except perhaps Israel. No American president has ever flaunted his country's superiority so blatantly although its military might and economic strength was unchallenged at some points before. Now that equation has certainly diminished considerably with the rise of China as an economic powerhouse and a strong military force thanks to its planned development of advanced technology. 

Apparently, Trump gives the impression that he is more a flamboyant showman than a seasoned diplomat. But there is method in his madness. His stated goal may be 'America First' policy in waging the trade war. But essentially, it is targeted to counter the rising influence of China. This is why the list of 14 countries made of late for imposition of Trump's revised reciprocal tariff includes an overwhelming majority of South-East Asian (SEA) nations. Out of the 14, there are eight such countries which depend heavily on China's supply chain of source materials or spare parts. China has been smart enough to purchase mineral mines one after another in several countries in order to establish some kind of monopoly on a few rare metals essential for production of semiconductor and other sophisticated devices. If Vietnam with which Trump's administration has already clinched a bilateral tariff agreement allowing the country's goods to have access to US market on payment of 20 per cent levies instead of the 46 per cent announced in April last, the number would be nine. 

Well, this much is understood but why Bangladesh, South Africa, Kazakhstan, Tunisia, Serbia and Bosnia & Herzegovina have figured in this list may seem puzzling. The revised tariff imposed on goods exported to the US from Bangladesh is 35 per cent, down from 37 per cent. Significantly, Japan and South Korea, both allies of the US in the region and have long been partner in countering Chinese influence in SEA have not been spared the tariff trouble. In fact, in the revised arrangement, tariff on Japan has gone up from 24 per cent to 25 per cent. South Korea's rate remains as it was at 25 per cent. 

However, Cambodia and Laos originally asked to pay 49 per cent and 48 per cent respectively have been imposed hefty rates of 36 per cent and 40 per cent. The drop for Myanmar is from 44 per cent to 40 per cent. Trump's ploy is likely to backfire because China is well prepared for any such trade war. Its economy is strong enough to absorb any shock from trade disruption with the US. If China suffers, so does the US, if not more. Moreover, the Brazil, Russia, India, South Africa (BRICS) group is gaining strength with more nations coming or expressing their willingness to assemble under the umbrella. This is amply demonstrated by the response Brazil's President Luiz Inacio Lula Da Silva made at the end of the BRICS summit in Rio de Janeiro to the threat issued by Trump of imposing retaliatory tariff on BRICS members. Brazil's president categorically said that the world no longer needs 'an emperor'. Indeed, Trump's latest behaviour is more like an emperor who can make and unmake any nation or people. 

The rise of BRICS of which India with its increasing leaning towards America is a founding member, has certainly proved to be a headache for Trump. The BRICS may have retracted from introducing its own currency to challenge the greenback but Mr. Lula reaffirmed that such a possibility has not been shelved permanently. "The world needs to find a way that our trade relations don't have to pass through the dollar", he insisted at the press briefing after the BRICS summit. When the humanitarian issues such as the daily massacre of the Palestinians including hungry civilians who gather looking for food aid is overlooked in favour of bombing Iran's nuclear facilities by the so-called 'emperor', his place in history's dungeon is predestined. 

His trade war as a ruse for creating jobs for workers in his country and relocation of factories and industries at home will likely to end in failure. The expansive manufacturing hubs in China not only produce all kinds of machines and tools ---from needles to fighter planes, but also do so on a massive scale and at costs unrivalled by any country. So, China would not be affected much with such an industrial base centrally planned and commanded. The BRICS bloc's original members have a 40 per cent population of the world's total. The market is vast and it will expand further with more nations joining the bandwagon. If China and India can do the balancing act with India maintaining its close relations with Russia and America, the BRICS indeed have everything to gain and nothing to lose.

If political strategies follow the economic compulsions, not only China and India but the countries in the Middle East may have a greater stake in the BRICS bloc than their relations with America. Notably, Pakistan, a staunch ally of China has not been given membership of the BRICS. This is evident enough that economy gets the better of military support. Both Chinese and Indian economies are likely to grow at paces until 2050 that others cannot match. So the Asian decades are most likely to dawn curtailing much of America's dominance. Trump may end up doing exactly the opposite of his intended goal. 

nilratanhalder2000@yahoo.com