'De-Americanization' of trade is on the cards

The United States' weaponization of tariffs not only harms the interests of other countries, but also increases the uncertainty for the US economy, which in turn has a profound impact on global trade and the world economy.

The US' weak consumption growth and shrinking manufacturing activities have lowered market expectations and risk aversion is on the rise.

The tariff policy makes imported goods and related products more expensive in the US, which will directly harm the interests of US consumers and companies. Small and medium-sized enterprises in the country have already found it difficult to cope with rapid changes in the supply chain and on the cost side. They are likely to become the first batch of "dominoes "to fall under this round of tariff shocks. According to data of S&P Global Market Intelligence, the total number of US corporate bankruptcies in the first two months of this year has reached 129, the highest since 2010, and most of the bankrupted companies are small businesses.

Nor will imposing tariffs necessarily help create jobs in the US.Research by the Peterson Institute for International Economics shows that although the US' steel and aluminum tariffs protected about 14,000 jobs in the steel industry in 2018, they led to the loss of 75,000 jobs in the downstream manufacturing industries.

So although the imposition of tariffs seems to be in line with the "America First" policy, the tariffs actually backfire on the US economy and seriously undermine investor confidence. Relevant data show that the total market value of US stocks has evaporated by about $7.7 trillion over the past month. Under the escalating tariff "chaos", the US economy may experience inflation or even recession.

That will unavoidably be a drag on the world's economic growth, as indicated by the latest estimates of the Organisation for Economic Co-operation and Development that both US and global economic growth are set to be lower than previously projected as the US' punitive tariffs on goods imported to the US weigh on growth.

"Global GDP growth is projected to moderate from 3.2 percent in 2024, to 3.1 percent in 2025 and 3.0 percent in 2026, with higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty weighing on investment and household spending," the OECD said on Monday in its interim Economic Outlook report.

Annual GDP growth in the United States is projected to slow from its recent strong pace, to be 2.2 percent in 2025 and 1.6 percent in 2026 the report forecasts. In the OECD's previous projections in December, it had estimated 3.3 percent global economic growth this year and next, with the US economy expected to grow 2.4 percent in 2025 and 2.1 percent in 2026.

The US tariff policy deviates from the principle of free trade and undermines the multilateral cooperation mechanism of global economic governance. In order to avoid the high tariffs of the US, companies in various countries will have to adjust their layout, reduce their dependence on the US market, and find new suppliers and production bases. The final consequence may be the opposite of the US' objective, as the tariff policy might form a trend of "de-Americanization "in the global industry and supply chains.