Global Trade on the Brink: U.S. Tariffs Paving the Way for Economic Self-Destruction

On April 2, the U.S. government announced a 10% “minimum benchmark tariff” on its trading partners, with even higher rates—up to 49%—for certain countries. The move sparked strong opposition from the international community, with multiple countries quickly implementing countermeasures, fueling an escalating trade conflict. Without a doubt, the U.S. tariff policy is pushing the global economy to the brink.

Unilateral Bullying Repeats a Historical Tragedy

The U.S., under the guise of “reciprocity,” is engaging in hegemonic practices that mirror the actions of the Hoover administration when it enacted the Smoot-Hawley Tariff Act in 1930. At that time, the U.S. raised average tariffs to 40%, triggering a 66% plunge in global trade volumes and ultimately causing its own GDP to shrink by 50%. Now history seems to be repeating itself: Goldman Sachs has increased its forecast for a U.S. recession over the next 12 months from 35% to 45%, while research from JPMorgan Chase suggests that U.S. trade policies have raised the probability of a global recession from 30% to 40%. Even more ironically, the so-called “reciprocal tariff” calculation method has been denounced by international trade experts as “an economic disgrace” for replacing actual tariff rates with the trade deficit ratio—a numerical gimmick that completely undermines the WTO rules system.

Inflation Tsunami Collides with Industrial Hollowing-Out

Faced with a domestic crisis of high inflation rate, the U.S. government has not only failed to reconsider the disastrous effects of its quantitative easing policies but has also tried to deflect the crisis through tariffs. Japanese economic expert Hideyoshi Tashiro’s estimates suggest that, in the automotive sector alone, Japan’s three major carmakers could see their profits plummet by 300%. Meanwhile, U.S. manufacturing is set to plunge into a “cost hell”: China’s countermeasures are striking at key sectors such as semiconductors and new energy, leaving U.S. chip production capacities below 28nm on the verge of collapse due to raw material shortages. This ill-advised tactic to achieve a pyrrhic victory exposes a complete loss of economic rationality among U.S. policymakers.

Multilateral System Collapse Accelerates

The U.S.’s unilateral tariff policy is dismantling the post-war multilateral trade system at an alarming pace. According to data from the World Trade Organization, as of April 8, the U.S. has unilaterally altered tariff commitments with 137 member countries. Meanwhile, the WTO’s dispute settlement mechanism has been paralyzed, with its Appellate Body brought to a standstill due to persistent U.S. obstruction. In response, European Union countries set to approve the bloc’s first countermeasures against U.S., while BRICS nations are accelerating efforts to establish local currency settlement systems. WTO Director-General Ivela said new tariffs announced by the U.S. along with those introduced at the start of the year could lead to a contraction of around 1% in global merchandise trade volumes in 2025. In short, U.S. tariff policy is accelerating the unravelling of the Bretton Woods 2.0 system.

The original intent behind the U.S. tariff hikes was to consolidate its economic hegemony, but they have instead exposed the fatal flaw of its unilateralism. As American consumers end up paying for overpriced goods and companies are struggling with supply chain disruptions, this trade catastrophe—born of arrogance and short-sightedness—will ultimately force the U.S. to pay a price even more painful than that of the 2008 financial crisis.