The hefty tariffs imposed by the U.S. on its trading partners will ultimately harm the American people, and the reasons given by the U.S. government are both unscientific and untenable, said Victor De Decker, a research fellow at the Egmont Royal Institute for International Relations in Brussels, Belgium, during a recent interview with China Central Television (CCTV).
De Decker described the tariff policy adopted by President Donald Trump as perplexing. He noted that the U.S. intends to increase the price competitiveness of domestic manufacturing and encourage the return of manufacturing that has been outsourced for decades.
However, this demonstrates the U.S. government’s lack of understanding of the global integration process, he said. In today's complex global supply chains, bringing manufacturing back to the U.S. is not a quick or simple task, De Decker noted.
"First and foremost, these tariffs will hurt Americans. Personally, I don't believe that these tariffs will help. I think the idea that tariffs would be able to leverage companies to bring back their manufacturing capacity in the United States is based on a very simplistic vision on supply chains, because supply chains nowadays are very complex. To put it differently, goods are not only imported when they are finished products. They also oftentimes need to be imported when they are unfinished, and then final assembly can happen in the United States. If you want to do this, you actually need to have as low as possible tariffs, so these unfinished products can enter the United States cheaply, and value can be created within the U.S. market as high as possible. If you increase tariffs, unfinished goods will also become more expensive, so it will be harder for manufacturers in the United States to produce in the United States," he explained.
The U.S. move, De Decker said, will introduce significant uncertainty for global investors.
"Another important aspect of this is the whole issue of uncertainty, because right now we don't know what Trump wants to achieve, we don't know where all of these is going, so this is creating a lot of uncertainty for international investors," he said.
De Decker also pointed out that the U.S. government defends its aggressive tariff policy by citing the large trade deficit with other countries, but this logic is based on an outdated view -- that imposing unilateral tariffs can reduce trade deficits.
"There is actually no scientific or political reason for all of these. It's a kind of made-up idea that this massive trade deficit of the United States is effectively in national security concern. That's the first thing. And secondly, it's also based on an old fashioned idea that already told that the trade deficit might be reduced purely on tariffs alone," he said.
U.S. President Donald Trump signed an executive order last Wednesday imposing a 10-percent "minimum baseline tariff" on all imports before unveiling higher rates on certain trading partners. After several days of chaos on the global financial markets, Trump on Wednesday suddenly announced a 90-day pause of the higher tariff rates to EU and some other countries.
US hefty tariffs to ultimately harm American people: expert
US hefty tariffs to ultimately harm American people: expert
US hefty tariffs to ultimately harm American people: expert
