The reciprocal tariffs introduced by former US President Donald Trump were not only controversial but also economically unsustainable. These protectionist measures, while aimed at asserting American economic interests, have triggered a ripple effect—fueling inflation, straining logistics, and placing heavy burdens on US manufacturers and consumers.
At the core, these tariffs threaten to dismantle the world trade order, replacing cooperation with chaos. Trump’s aggressive trade stance—largely built around the notion that the US has been “ripped off” for decades—has turned global trade into a battleground. The implications have been profound, reshaping investment flows, economic alliances, and even the monetary policy direction of other nations.
A Disruptive Economic Strategy
By attempting to reset the world economic order—encouraging industry repatriation to the US and consumption shifts to Asia—Trump has aimed for political capital at the cost of economic harmony. The results, however, suggest a more disruptive than constructive outcome.
While US Customs guidelines have exempted products like smartphones and computers, the broader tariff landscape remains fraught with contradictions. These inconsistencies reflect internal conflicts within the Trump administration and the difficulty of implementing such sweeping measures.
Global Investor Confidence Shaken
The uncertainty surrounding US trade and fiscal policy has severely eroded investor confidence. As the world’s largest economy—with a GDP nearing $30 trillion—the US plays a pivotal role in the global financial system. Yet, under Trump’s trade policies, even this status is under threat.
According to World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala, while the US accounts for 13% of global trade, the remaining 87% is conducted among other WTO members. The implication is clear: the global economy can pivot away from US dominance, especially when America chooses isolation over integration.
Sweeping Tariffs and Their Fallout
Trump’s tariffs spanned a broad spectrum:
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25% on steel and aluminium
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145% on Chinese goods
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25% on Mexican and Canadian products not aligned with trade agreements
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10% baseline tariffs on nearly all imports
Credit rating agencies like Moody’s have warned that these tariffs would “likely slow global economic growth significantly.” Even Federal Reserve Chair Jerome Powell acknowledged the unprecedented nature of these policy shifts, causing market tremors and raising fears of recession.
A System Without Rules
Trump’s tariff war marked the emergence of a “rule-less” global economic order—one where unilateral decisions override cooperative frameworks. This unpredictability became the new normal, destabilizing traditional alliances and institutions.
The broader implications? Inflation, economic slowdown, and reputational damage. The aggressive posture of the US has led many of its traditional allies—such as Canada, the EU, and China—to impose countermeasures, creating a global cycle of retaliation.
China Leads the Regional Response
Dr. Mehmoodul Hassan Khan, Executive Director of the Centre for South Asia and International Studies (CSAIS) in Islamabad, noted that countries have adopted strategic responses:
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Increased imports from the US to balance trade
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Diversification of export markets
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Regional cooperation frameworks such as RCEP, BRICS, and the SCO
This regionalism, along with a rise in free trade agreements, joint ventures, and mutual investments, serves to cushion the blow of US protectionism and reduce dependence on the American market.
America’s Self-Inflicted Damage
Ironically, the US may be the biggest casualty of its own policies. Rising inflation, widening budget deficits, and growing political discontent have undermined both domestic and international confidence in its economy.
Investor flight from US debt markets, dwindling foreign investment, and global stock market volatility all reflect a system under stress. China’s decision to reduce US LNG and energy imports, coupled with its divestment from US financial assets, adds fuel to the fire.
As trust erodes, the very foundation of US financial leadership is being questioned.
Conclusion: A Dangerous Path Forward
The Trump administration’s tariff policy, far from being a strategic masterstroke, has proven to be a political illusion—one that jeopardizes global trade stability, damages the US economy, and risks dismantling decades of progress in multilateral cooperation.
The world’s response—through regional collaboration and strategic diversification—signals a shift away from US-led globalization towards a more balanced, multipolar trade structure. Whether this change leads to greater resilience or deeper fragmentation remains to be seen.
