讀後心得

U.S. President Trump implemented a 10% "reciprocal tariffs" on nearly all imported products in an attempt to prevent job losses overseas, which is a clear rejection of globalization and brings the U.S. back to a past era of protectionism. This policy has resulted in U.S. tariff revenue surpassing that of G7 and G20 countries, resembling levels seen in countries like Senegal. It triggered a global trade war, stock market volatility, and contradicted the principles of free trade. Trump's policies seem aimed at bringing manufacturing back to the U.S., but they actually overlook the overall economic benefits of free trade and could lead to long-term chaos in the U.S. economy.

U.S. President Trump has set up another obstacle, believing that other countries will bear its costs. This time, he has imposed at least a 10% "reciprocal tariff" on almost all imported products, which is essentially a barrier designed to prevent jobs and employment opportunities from flowing abroad, rather than blocking immigration. The form of this barrier needs to be considered from a historical perspective, taking the U.S. back to a century-old protectionist era. In terms of tariff revenue, the U.S. has quickly surpassed G7 and G20 countries, reaching levels comparable to Senegal, Mongolia, and Kyrgyzstan. Recent events are not just the U.S. initiating a global trade war or causing stock market fluctuations, but rather this global superpower clearly betraying the measures that have promoted globalization over the past decades. The economic logic behind Trump’s announcement of tariff policies in the White House Rose Garden not only deviates from basic economic principles but also violates fundamental diplomatic norms.

In announcing the tariff policy, Trump frequently mentioned 1913, a pivotal turning point when the U.S. began imposing federal income taxes and significantly lowering tariffs. Since the founding of the United States, tariffs have been a major source of revenue for the U.S. government, which at that time implemented protectionism unabashedly, a strategy rooted in the ideas of the first Secretary of the Treasury, Alexander Hamilton. The current administration has learned that high tariffs contributed to America's rise and allowed it to part ways with federal income tax. In the UK, this remains the core foundation of politics and economics. Even today, while most countries still believe in the theory of comparative advantage, the heart of globalization, the U.S. seems never to have fully accepted this theory, with potential resistance never fading away.

The logic behind these known "reciprocal tariffs" is quite worth pondering, as these figures are almost unrelated to the actual tariff rates of various countries. The White House statement noted that these figures take into account multiple factors, such as bureaucratic systems and currency manipulation. In reality, a close examination of this seemingly complex formula shows it's merely a simple method for measuring a country’s trade surplus with the U.S.: the dollar amount of the U.S. trade deficit divided by that country's total imports. A senior White House official publicly explained an hour before the press conference, "These tariffs are tailored by the Council of Economic Advisers for each country... Their model is based on the idea that trade deficits are the cumulative result of all unfair trade practices." According to the White House, if a country’s exports to the U.S. exceed its imports, it will be seen as "cheating," hence deserving of corrective tariffs.

This is also why the absurd story of the U.S. taxing almost deserted small islands reveals the actual workings of the policy calculation. The long-term goal of this policy is to reduce America's trade deficit of $1.2 trillion and its deficit with the largest trade deficit countries to zero. This calculation formula is rather simplified, targeting not those countries with clear trade barriers but rather countries that have trade surpluses with the U.S. Whether they are poor nations, emerging economies, or tiny islands, as long as the data shows a surplus, they will become targets. The reasons for trade surpluses or deficits vary, and there is no inherent justification for trade differences to "be zeroed out." The differences in production capacities and resources among different countries are the foundation of trade, but the U.S. seems no longer to believe in this concept.

If the same logic were applied to service trade, the U.S. would have a surplus of up to $280 billion in areas like financial services and social media; however, service trade has been excluded from the White House's tariff policy considerations.

In fact, the U.S. government is disappointed with the failure of globalization, believing its original intention was that "rich countries would elevate the value chain, while poor countries would manufacture simple products," but this goal has not been achieved, particularly in the case of China. Currently, the U.S. plan is to break away from this globalization model, placing less emphasis on Ricardo's theory and more on the "China Shock Theory" derived from MIT economist Otto. In 2001, when China joined the WTO and could relatively freely access the U.S. market, it changed the global economic landscape. With China's rural labor force entering coastal factories to produce cheaper export goods, it provided convenience for American consumers, which is a classic example of "comparative advantage" at work. China thus profited trillions of dollars, and a large amount of capital returned to the U.S. in the form of purchasing U.S. Treasury bonds, helping to lower interest rates.

The Trump administration has given a negative assessment of the past half-century of free trade, calling it a "predatory" practice against the U.S. However, this does not completely reflect reality. Although American consumers have become generally wealthier from buying cheaper goods, the accompanying consequence has been a significant loss of manufacturing jobs, which have moved to East Asia. Otto’s research shows that by 2011, the U.S. had lost about one million manufacturing positions, totaling 2.4 million job losses, heavily impacting the "Rust Belt" and southern regions. The impact of trade shocks on employment and wages has persisted for quite some time.

This week at the White House, auto unions and oil and gas industry workers gathered to celebrate the promises brought by the tariff policy, hoping these jobs would not only return to the "Rust Belt" but spread across the country. This is somewhat plausible, as the President sent a clear signal to foreign companies that if they want to avoid tariffs, they must move factories back to the U.S. From Biden’s incentives to Trump's hardline tactics, this strategy could bring substantial changes. However, calling the last half-century of free trade history "predatory" clearly fails to reflect reality. While free trade has negatively impacted certain areas, industries, or demographics, overall, the U.S. has benefitted greatly from it.

The U.S. service industry is thriving, with Wall Street and Silicon Valley dominating global markets. American consumer brands gain huge profits through efficient supply chains, and goods are widely sold around the world. The overall economic performance is quite good, but the problem lies in the uneven distribution of benefits and the lack of sufficient wealth redistribution and transformation measures, which means that economic benefits have not been evenly distributed across the nation, reflecting American political choices.

As the U.S. adopts sudden protectionist measures in an attempt to "bring back" manufacturing, other countries also face choices: whether to continue supporting the capital and trade flows that once made America prosperous? Global consumers are greatly affected by these choices. Countries that once hoped to be factories for American consumers are now facing choices as well, with new economic alliances gradually forming in search of relief from America's erratic behavior. Trump is particularly sensitive to this; if the EU and Canada join forces in retaliation, he threatens to raise tariffs, which could create a nightmarish scenario. In the game of trade wars, credibility is crucial. The U.S. possesses unparalleled military and technological strength, but rewriting global trade rules in ridiculous ways can arouse resentment among countries. The larger issue arises when most believe that the U.S. President's plans will harm itself.

Today, the U.S. stock market is suffering heavy losses, and inflation has followed. Wall Street is estimating that the U.S. is more than half likely to fall into economic recession. This theory seems plausible; Trump’s real goal may be to weaken the dollar and lower U.S. borrowing costs. Currently, the U.S. is gradually withdrawing from the global trade system it created. Although such a system can still operate, it will undoubtedly bring chaos.