讀後心得

The U.S. President Trump implemented a "reciprocal tariff" of at least 10% on almost all imported goods, intending to prevent job losses, similar to historical protectionism. This move has also triggered a global trade war and indicates the United States' departure from the long-promoted globalization process. Trump's criticism of free trade and the implementation of high tariffs reflect the significant changes and inequalities in the U.S. economy, especially regarding the manufacturing sector. The goal of this protectionist policy is to reduce the trade deficit, but it may further disrupt global markets and potentially lead to an economic recession. The global response to the U.S. and the future trade landscape will be closely watched.

U.S. President Donald Trump has once again built a new wall, predicting that other countries will pay the price for it. However, this time, he has launched a "reciprocal tariff" of at least 10% on almost all imported goods, which is actually aimed at preventing the outflow of jobs and employment opportunities rather than blocking immigration. To understand the significance of this wall, it must be viewed in historical context. This brings the U.S. back to the days of protectionism from the last century. In terms of tariff revenue, the U.S. has now surpassed the G7 and G20 countries, reaching levels similar to those of nations like Senegal, Mongolia, and Kyrgyzstan. The recent developments are not only a global trade war initiated by the U.S., or the resulting volatility in the stock market, but also reflect this global superpower's clear abandonment of the globalization process that has driven and benefited it over the past several decades. At the same time this policy was implemented, Trump announced the economic logic behind the tariff policy in the White House Rose Garden, which not only violates the basic principles of economics but also deviates from fundamental diplomatic norms.

When announcing the tariff policy, Trump referred to the year 1913 multiple times. It was a turning point when the U.S. implemented a federal income tax while drastically reducing tariffs. Prior to this, tariffs had been the primary source of financial revenue for the U.S. government since its founding, and its protectionist policies can be traced back to the first Secretary of the Treasury, Alexander Hamilton. The lesson the current U.S. government has learned is that high tariffs built the foundation of America's greatness, allowing it to be "great" for the first time, and that it meant federal income taxes were not necessary. Across the Atlantic, the support for globalization and free trade is rooted in the theories of 19th-century British economist David Ricardo, especially his theory of comparative advantage proposed in 1817. Although supported by mathematical formulas, the basic concept is relatively easy to understand: due to differences in natural resources, population creativity, and so on, countries are better suited to produce certain products. Broadly speaking, if each country focuses on its strengths and engages in free trade, life globally and in each country will improve.

The lesson learned from historical experience by the White House is that high tariffs once made America "great" for the first time. In Britain, this principle remains the core foundation where politics and economics intersect. Most countries in today's world still believe in the theory of comparative advantage, which is at the heart of globalization. However, the U.S. has never fully accepted this theory. The potential resistance to it in the U.S. has never disappeared. This week, the U.S. Trade Representative constructed a creative formula that calculated the data presented by Trump in charts, reflecting this point precisely.

The logic behind these "reciprocal tariffs" is worth delving into because these figures are almost unrelated to the actual published tariff rates of countries. The White House stated that these numbers considered factors such as bureaucracy and currency manipulation. But a careful analysis of that seemingly complex formula reveals that it is, in fact, a straightforward way to assess a country's merchandise trade surplus with the U.S.: divide the trade deficit amount with that country by the total imports from it. An hour before the press conference began, a senior White House official admitted, "These tariffs are tailor-made by the Economic Advisers' Council for each country... The model they used is based on the idea that our trade deficit is the result of all unfair trade practices and all forms of cheating." This is crucial because, according to the White House, if a country exports more to the U.S. than it imports from it, then this will be seen as "cheating," and tariffs designed to correct this imbalance should be imposed.

This also explains the surreal story of the U.S. imposing tariffs on some virtually unvisited islands inhabited only by penguins, which precisely reveals the true calculation method of this policy. The long-term goal of this policy is to reduce the U.S. trade deficit, which is as high as $1.2 trillion, and the deficit with those countries that have the largest trade deficits with the U.S. to zero. The calculation formula is actually extremely simplified and is not aimed at countries with clear and quantifiable trade barriers but instead focuses on countries that have a trade surplus with the U.S. Whether it's underdeveloped countries, emerging economies, or even small islands, as long as the data show a surplus, they will become targets. Although there is some overlap between these two factors, they are not the same. The reasons for trade surpluses or deficits are quite diverse, and there is no innate reason to support that trade differences should "go to zero." Countries produce different products and have various natural and human resources, and these differences are the basis for trade. However, the U.S. seems to have lost confidence in this. In fact, if a similar theory were applied to service trade, the U.S. has a surplus of up to $280 billion in areas such as financial services and social media technology, which are excluded from the White House's tariff calculations.

This actually has a deeper significance. As stated by the Vice President of the U.S., the current government believes that globalization has been deemed a failure because the original expectation was that "wealthy countries would further enhance value chains while poorer countries would produce simpler goods." However, the outcome was not as such, particularly in the case of China. Therefore, the U.S. is determined to move away from this globalization model. For the U.S., it is no longer the age of David Ricardo, but rather the age of David Autor, an economist from MIT, whose "China Shock" theory aptly explains this situation. In 2001, when the world was focusing on the aftermath of the 9/11 events, China joined the World Trade Organization and gained relatively free access to the U.S. market, thereby changing the global economic landscape. As China’s rural population flooded into coastal factories to produce cheaper export goods for American consumers, the living standards, economic growth, profits, and stock markets in the U.S. were all enhanced, a classic example of a "comparative advantage" functioning normally.

China thus gained trillions of dollars in profits, most of which were reinvested back into the U.S. in the form of buying U.S. Treasury bonds, helping to lower interest rates. The Trump administration characterized the past fifty years of free trade as a "rape and pillage" of the U.S., but this does not reflect the overall reality. Essentially, American consumers have collectively become wealthier as they are able to purchase goods at lower prices, but in exchange, the U.S. has lost a large number of manufacturing jobs, which have shifted to East Asia. Autor's research indicates that up until 2011, the "China Shock" caused the U.S. to lose about one million manufacturing jobs, with a total loss of around 2.4 million positions. These shocks primarily concentrated in the "Rust Belt" and the southern regions, and the impact of this trade shock on employment and wages has lasted a long time. Autor further updated his analysis last year, revealing that while the protectionist tariffs promoted by the Trump administration during its first term had a limited net impact on the overall economy, they definitely weakened support for the Democratic Party in affected areas and bolstered Trump's support in the 2020 presidential election.

This week, the White House hosted a group of auto union and oil and gas industry workers celebrating the tariff policies. Their promised assurance is that these jobs will not only return to the "Rust Belt" but will spread across the entire U.S. To some extent, this is achievable. The president's clear message to foreign companies is that to avoid taxation, they must relocate factories back to the U.S. From the various incentives proposed by the Biden administration to Trump's hardline measures, this strategy may indeed bring about substantial change. However, the president's characterization of the past fifty years of free trade as a "rape and pillage" of the U.S. clearly does not reflect the overall reality. While free trade has indeed negatively impacted specific regions, industries, or groups, overall, the U.S. has benefited significantly. The American service sector is thriving, dominating global markets from Wall Street to Silicon Valley. Meanwhile, U.S. consumer brands have also gained immense profits by leveraging ultra-efficient supply chains covering China and East Asia, with American products being sold worldwide. The economic performance of the U.S. has been quite good, but the issue lies in the extremely uneven distribution of these outcomes across different industries, and the U.S. lacks sufficient wealth redistribution and transformation policies, resulting in these economic gains not benefiting the entire nation.

As the U.S. tries to "reshore" manufacturing through a series of sudden protectionist measures, other countries are also faced with choices: whether to continue to support the capital and trade flows that once enriched the U.S. Global consumers have choices. Countries that once bet on becoming factories for American consumers will also face choices, and new economic alliances will gradually form and deepen, aiming to seek to distance themselves from the ever-changing U.S. policies. The president is extremely sensitive to this and has threatened that if the EU and Canada retaliate together, tariffs will be raised. This could become a nightmarish scenario. In the game theory of trade wars, credibility is crucial. While the U.S.'s powerful military and technological capabilities may be helpful, attempting to rewrite global trade rules with a random and obviously unreasonable formula is likely to provoke backlash from other countries, especially when those countries perceive that the gun in the president's hand is aimed at their own toes. The U.S. stock market has been severely affected, and the inflation problem in the U.S. will naturally be the first to bear the brunt. Wall Street is currently calculating that the probability of the U.S. falling into an economic recession has exceeded 50%. Perhaps this theory is not unfounded, suggesting that the real goal is to weaken the dollar and lower U.S. borrowing costs. Currently, the U.S. is gradually withdrawing from the global trade system it built, and although this system can still function, the process of change will be extremely chaotic.