Trump's tariff approach is unwise both as a policy tool and a strategy

Editor's note: Azhar Azam, a special commentator on current affairs for CGTN, works for a private organization as a market and business analyst. He writes on geopolitical affairs and regional conflicts. The article reflects the author's opinions and not necessarily those of CGTN.

On February 10, U.S. President Donald Trump announced new 25 percent tariffs on all steel and aluminum imports into the U.S. Many critics believe that yet more import duties are coming.

Trump has framed tariffs as a tool to stimulate the U.S. economy, protect jobs, generate tax revenue and pressure other countries into trade talks, not grasping that this strategy could backfire, ending up weakening America's growth, raising the cost of living at home and causing economic disruption worldwide.

Trump's new policy has a wider influence. The largest sources of U.S. steel imports are Canada, Brazil and Mexico, followed by South Korea and Vietnam, according to data from the American Iron and Steel Institute. New 25 percent tariffs would be a serious impediment to these cross-border trades and likely to hurt the U.S. economy in return. Even Trump himself has acknowledged that tariffs will do harm to Americans.

Academic and governmental studies confirm that tariffs have raised prices in the U.S. and lowered its economic output and employment since 2018. These taxes were almost completely absorbed by American consumers and retailers. There is resounding evidence that new tariffs will be passed to U.S. importers and consumers, severely affecting lower income households and hurting growth and pushing up prices.

It isn't that the U.S. does not comprehend the cataclysmic repercussions of tariffs on Americans. In 2019, Joe Biden denounced Trump's tariffs on China, saying "He thinks tariffs are being paid by China. Any freshman econ student could tell you that the American people are paying his tariffs."

This led to hopes that Biden, after becoming U.S. president, would rescind these duties to help alleviate some of the economic worries of Americans. Yet, in his ideology-driven pursuit of weakening China economically, the former U.S. president kept those levies in place that hit Americans hard and eventually became a political liability for his party in the 2024 U.S. presidential election.

Levies will not make a significant impact on the Chinese economy given the fact that China is comparatively less dependent on the U.S., thanks to its steady shift to domestic production and consumption and trade with other countries. Studies of the CPB Netherlands Bureau for Economic Policy Analysis show that Chinese exports are outpacing global trade – with Chinese exports up 12 percent or more in volume terms while global trade is growing at more like 3 percent.

But these domestic tariffs will surely hurt the U.S. growth, drive up inflation and lead to spiraling prices of everyday products for American consumers. Due to the catastrophic impacts of tariffs, the U.S. health sector, that despite efforts to build a domestic supply chain relies heavily on international sources for generic drugs, will come under tremendous pressure, making it more vulnerable to drug shortages.

Tariffs will also neutralize Trump's own economic agenda that he, on the campaign trail, billed as a surefire way to cut the cost of living for Americans, making the lives of the most of them a lot tougher.

By pursuing a trade war with China and others, the "tariff man" is meting out a blow to U.S. households and exacting a "self-inflicted wound to the U.S. economy." This "bully strategy" didn't bring manufacturing jobs home before and could contract the U.S. GDP, say economists, by 1.5 percent and 2.1 percent in 2025 and 2026.

While Trump's tariffs are a wake-up call for countries that have hitched their political and economic interests solely with the U.S., underscoring the importance of diversifying their relations, they will exacerbate trade tensions, lower investment, reduce market efficiency and disrupt supply chains, resulting in further erosion of the international trade system.

The first Trump administration's tariffs undermined its exporters' global competitiveness by increasing the input costs of components and parts imported from China. The new trade war could be even more devastating for Americans and the U.S. economy as it covers a much broader range of goods.

Trump's tariff approach is unwise both as a policy tool and a strategy not only because it simultaneously hurts domestic consumers, puts the U.S. exporters at a disadvantage against global rivals and curtails the country's economic prosperity, but also because it damages America's credibility as a reliable trading partner and drives countries to instead trade among themselves.

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