Could Trump's tariffs turn global trade topsy-turvy?

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On April 9, 2025, U.S. President Donald Trump announced a drastic shift in U.S. trade policy: a 90-day pause on higher tariffs for nations, locking in a flat 10 percent rate until July. But for China, the stakes are stark: a 145 percent tariff on all imports to the U.S., intensifying the global trade tangle. This policy risks redefining the global economy, but will it deliver results or unintended fallout? CGTN posed these questions to Professor Michael Dunford of the University of Sussex. Here's what he has to say.

Dunford: I think the United States is accustomed to acting as a global hegemon. So, if it considers its strategic interests are at stake, then it's prepared to act in ways that do not involve negotiation with its international partners, that can actually damage the interests of the rest of the world and that can even damage the interests of its allies.

I think, in effect, the U.S. government is dismantling the current international economic system. And in doing so, he's doing something that is quite similar to what Richard Nixon did in 1971. He, in effect, forced a revaluation of the currencies of European allies who had trade surpluses with the United States.

Echoing Nixon's 1971 shock, these measures risk cascading crises across the Global South. But what drives such drastic trade actions? Beyond protectionism, the U.S. is grappling with ballooning deficits and rising interest rates, pushing Washington toward stringent measures. Professor Dunford unpacks how this internal financial strain is dividing global alliances.

Dunford: I think what has happened today is that the United States' trade deficits have become extremely large, unmanageably large. And I think that the U.S. government is responding to the existence of these deficits, which actually derive from the lack of competitiveness of the United States' economy. They derive from a lack of domestic investment. They derive from the fact that it was decided to move manufacturing capacity offshore, really in order to improve the profitability of U.S. corporations and also to provide for American consumers, a whole range of very, very important goods at very, very low prices.

But at the same time, the United States has accumulated an enormous amount of debt. And I think that one of the aims at the moment is essentially to reduce short-term debt. I mean, at the moment, the U.S. has about 8.66 trillion in short-term debt with interest rates in excess of 4 percent. And I think that they're seeking really to refinance this debt to convert much of it, if they can, into long-term debt. I mean, the inevitable consequence is going to be a division of the world. It's very difficult to see any other outcome.

Professor Dunford argues this isn't just an economic pivot, it's a rupture. As the U.S. doubles down, the fractures deepen in trade, finances and alliances.

Dunford: I think for the rest of the world, the obvious choice is that to try to, if you like, again, diversify their trade partnerships. And I think that's happened to some extent already, because I think South Korea, Japan and China are seeking to improve and increase trade amongst themselves. And I think the same thing can happen in relation to ASEAN; the same can happen in relation to RCEP and the same can happen in relation to Eurasian integration.

And I mean, this points to the development of the trade settlement mechanisms that are actually being discussed at present by the BRICS. So, I think that pushes in the direction of a divided international system. But I think that if you look at the sort of vision of China, that's actually a vision, which actually envisages the diffusion of development, the spread of development, the non-monopolization of intellectual property, so that technologies and ideas can spread.

So, although it's extraordinarily disruptive, in the medium to longer term, it could lead in the direction of a rather different type of international system, which drives much more in the direction of more equal development than the one from the past, with the exceptions of a few countries like China that managed to come from behind, actually reproduce very substantial international inequality.

The world is no longer aligning around a single pole. While Washington wields finance and trade as tools of influence, others are exploring alternate paths with regional currencies, parallel payment systems and emerging alliances. These aren't signs of forced decoupling, but of a global rebalancing. In this shifting landscape, the key question isn't who leads, but who adapts and who doesn't.

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