U.S. President Donald Trump took an unarguable step toward altering the global landscape of trade. He announced a wave of tariffs, targeting many of the nations accused of benefiting from Chinese investments. At a recent press conference, officials unveiled a new policy. Beginning on April 5th, their government will implement a 10% universal tariff on all imported products. Beginning April 9th, mutual tariffs will be imposed on a number of countries. In no uncertain terms, Trump has been calling this day a “liberation day” for the U.S. economy.
These tariffs especially hit countries that have been large recipients of Chinese investment. This move underscores the administration’s tough on crime approach to alleged economic wrongdoing. Countries such as Vietnam and Myanmar have borne the brunt of this shock, experiencing high effective tariff rates of 46% and 44% respectively. These measures will quickly elicit outrage, especially from vulnerable economies across the globe. Most of these countries are already burdened by levels of poverty and health-related crises.
Chief among those hardest hit is Lesotho, which today has the second-highest prevalence of HIV infection in the world. In Lesotho, nearly one in four adults is HIV positive. What’s more, as a result of the new policy, the country will face a jaw-dropping 50% tariff rate. This surprising move raises some serious red flags. It would do real harm to public health and to economic stability in countries that can ill afford greater adversity.
Madagascar and Cambodia, which currently have duty-free access to the U.S. market, are next in line to face the most significant tariff impacts—47% and 49%, respectively. Botswana will face a 37% tariff rate. High tariffs would exacerbate the economic hardship these nations are already suffering. This would drive significant protests and social unrest as citizens are forced to deal with the skyrocketing costs of imports.
America has been an incredibly difficult nut for China to crack, with a punishing 34% tariff. This new levy comes on top of the 20% tariff the U.S. government has already placed on their imports. This new combination of U.S. punitive tariffs further heightens trade tensions, and the resulting hostility from both countries is hard to overstate. It predictably makes uncertain the future of global trade relations.
Economic experts are cautioning that such an aggressive insertion of tariffs will elicit corresponding strides and retaliatory action from targeted nations. That would further complicate the dynamics of international trade. Higher costs on imports would result in increased costs for American consumers. This dramatic change would more than cancel out any benefits that might have resulted from the tariffs being imposed.
Several economists have contended that wanting punitive tariffs on less-fortunate economies is damaging to those countries themselves. At the same time, this may be the action that most destabilizes the global economy. Countries with smaller GDPs rely on their trade partners in order to increase their economic development opportunities. Imposing heavy-handed tariffs would do great damage further damaging their ability to recover from their current woes.
The ramifications of these tariffs go beyond the economic sphere, affecting U.S. foreign relations in the process. As countries respond to these newest trade restrictions, diplomatic tensions are likely to escalate, making negotiations and forging new alliances more difficult in the future.