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The United States finally dropped the other shoe. On Wednesday, it officially announced sweeping new tariffs, 10 to 50 percent, on all imports from 185 countries, with some exemptions for Canada and Mexico. The whole world, including the U.S. itself, is bracing for the impact of this unprecedented tariff hike by the U.S. in peacetime history.

Why did the U.S. wage a trade war on the whole world despite warnings from most economists and concerns from businesses, consumers and even some members of the U.S. Republican Party? Some argue that the simple answer is that the U.S. economy is in trouble and the Trump administration is trying to shift its own economic woes to the rest of the world.

The U.S. is grappling with an exploding debt, worsening inflation, growing trade deficit, unstable job markets and a growing gap between the rich and poor. With the belief that tariff is a key to solving these problems and that the U.S. has been "ripped off" by other countries for too long, its administration claimed that tariffs are suitable for its economy because it will generate billions in revenue, bring jobs back and benefit the American consumer in the end.

The sweeping tariffs by the U.S. are expected to have severe economic repercussions worldwide, especially for countries heavily dependent on exports to the U.S. For those countries, their economies might even be crippled. But that's not the concern of the Trump administration as long as the U.S. continues to thrive. However, economic downturns in these nations could set off a global recession, dragging the U.S. economy down too. Even before the official announcement, the mere prospect of the Trump administration's tariffs has already unsettled U.S. and global financial markets, triggering sharp declines.

Justin Wolfers, a professor of Economics and Public Policy at the University of Michigan, said on CNN that the odds of recession have risen dramatically. "The odds had already risen over the past few weeks as details of this plan came to light, and people were willing to bet that it was a 42 percent chance of a recession. That's now up to 52 percent," said Wolfers.

History has proven again and again that trade wars have no winners. The U.S.'s high tariffs in the 1930s didn't bring revenues to the U.S. government as it wished and didn't save the country from recession; rather, the U.S. sank deeper into recession.

U.S. Treasury Secretary Scott Bessent told the media after Trump's announcement, "Everybody sit back… do not immediately retaliate. Let's see where this goes, because if you retaliate, that's a way to escalation." This sounded like wishful thinking as well as a warning. The U.S. started this war, and how would it expect the targeted countries not to defend their interests and not to retaliate? Some U.S. allies, such as Australia, Canada, Japan, and South Korea, have pledged to respond.

The U.S.'s use of tariffs would deeply damage the international trade system. Trade protectionism would be on the rise, the global supply chain and division of labor would have to be reshuffled, and the financial markets would jitter.

While tariffs may bring back some jobs to the U.S. manufacturing sector, they could lead to job losses in other sectors if retaliations from trading partners disrupt key industries or push the economy toward a downturn. It resembles solving one issue only to create new, potentially more severe challenges. 

Will the U.S. businesses and consumers benefit from this trade war? Many economists agree that the tariffs will drive up business costs, as most of the complicated products produced or assembled in the U.S. depend on global sourcing. Companies will take in some of the costs and dilute the rest to consumers. Adam Leeb, CEO and co-founder of Astrohous, expressed his concern by saying that "no doubt there will be a huge impact" on businesses and "for businesses like mine and many other businesses in the States, we are going to have to raise prices. There's really no way around it."

In addition, many products essential to the U.S. market are either not produced domestically or are insufficient to meet internal demand, making imports indispensable. As a result, their prices are bound to go up. With around 70 percent of U.S. families living paycheck to paycheck and already facing financial struggles, even a small rise in living costs could worsen their economic hardship.

The U.S. championed free trade when its economy was strong; therefore, tariff was not a "beautiful word." But when its economy was in trouble, imports were an easy target. In fact, the U.S. has been benefiting from foreign trade and globalization. As indicated by WTO Director-General Ngozi Okonjo-Iweala in her recently published article titled America's Big Trade Win, the U.S. is not only a beneficiary of the global trade system, but also holds a dominant position in service trade. So, the claim that the U.S. is being "ripped off" is unfounded.

U.S. consumers have been benefiting from affordable commodities imported from around the world. For a consumption country like the U.S., affordable foreign goods contribute to the economy.

It's legitimate for the U.S. government to "make America great again." But the U.S. should cure its own economic woes without inflicting wounds on others. Make U.S. products more competitive through innovation instead of protectionism, expand growth areas instead of protecting old industries (the U.S. is already in the high-end of the economic pyramid), bring down inflation through lowering tariffs, attract investment through stable business environment and preferential policies rather than coercion, make a fair distribution of wealth, create development opportunities for itself and the rest of the world so that both can thrive.

Ultimately, economics is extremely complicated and governed by its own principles and dynamics. It's pivotal to return to fundamental economic logic. The outcome of the trade war will hinge on the resilience and adaptability of the global economy, the stability of the U.S. economy, consumer behavior – particularly that of American consumers – and the prudence and foresight of world leaders.

Frank Yang is a commentator on international affairs for CGTN. 

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