U.S. President Donald Trump's so-called reciprocal tariffs aren't truly reciprocal and the math behind them could spell even bigger trouble, said a Chinese economist.
On April 2, U.S. President Trump announced sweeping tariffs on nearly all U.S. trading partners.
In an interview with China Global Television Network (CGTN), Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics, said that these seemingly simple calculations might end up hurting some of the world's most vulnerable countries and could even backfire on the United States itself.
He said that the calculation method of these so-called "reciprocal" tariff rates is ridiculous.
"Its fundamental basis is the trade balance, namely the U.S. trade gap or trade deficit. For a country that has a trade surplus with the U.S., he got a so-called reciprocal tariff rate by dividing the country's trade surplus by the U.S.' exports to the country. It feels like a primary school student solving a math problem. There's neither logic nor economic basis behind it. It has nothing to do with the country's actual tariffs on the United States," Tu said.
In other words, these tariffs are not "reciprocal" at all, he stressed.
"One issue with these least developed countries is that they export a large quantity of labor-intensive, low-end manufactured goods to the United States. However, from the U.S. side, there isn't much it can export to these countries. Based on Trump's calculations, it feels like the United States is being ripped off," he said.
Tu warned that implementing tariffs on trade partners will ultimately backfire on its own people.
"Low-end industrial goods from least developed countries or relatively backward developing countries are essential consumer products for low-income populations in the United States. Once tariffs are imposed, the prices of these products - the ones available at places like Walmart - will rise significantly. For average Americans of the low-income and lower-middle-income households, this will be a serious blow," he said.
If Trump's goal is to reduce the U.S. trade deficits, according to Tu, his plan will not succeed.
"I think the possibility is extremely slim. While Trump's tariffs may reduce U.S. imports, exports could fall even faster, because American products are simply not competitive in the world," he said. Tu noted that if the U.S. is effectively withdrawing from global trade, the rest of the world needs to strengthen their cooperation.
"The United States, being the world's largest economy though, accounts for only about 15 percent of global trade. If the remaining 85 percent can maintain free trade, it can still help expand the overall global trade 'pie' - offsetting the negative impacts of the U.S. withdrawal," he said.
Trump's 'not-so-reciprocal' tariffs could devastate world's poorest countries: economist
