[Text/Observer Network, Xiong Chaoying] US President Trump has officially launched a global trade war by imposing so-called "reciprocal tariffs," causing a widespread decline in global stock markets.
According to The Guardian's local report on April 5, British Prime Minister Keir Starmer is reassessing key elements of his government's economic policies to urgently respond to Trump's tariff blitz. Downing Street is increasingly concerned that the trade war initiated by the United States may cause long-lasting damage to the UK.
Political allies revealed that Starmer believes that Britain's response should "discard outdated notions," which implies that he and Chancellor of the Exchequer Rachel Reeves, despite previous promises not to do so, may now be preparing to raise taxes again. They might even modify their fiscal rules, which have been rigidly adhered to like "iron laws," to allow increased borrowing during an economic downturn and stimulate domestic economic growth.
When discussing Trump's tariff policy, Pascal Lamy, former Director-General of the World Trade Organization (WTO) and former EU Trade Commissioner, told The Observer (The Sunday Edition of The Guardian) - the best way to respond is to counterforce him strongly in a manner he can understand.
"I believe that Trump learned business in the New York real estate market influenced by organized crime. His strategy is based on extortion - as long as he doesn't get the desired increase, he will continue to exert pressure. In my view, displaying your strength is the correct way to deal with him and his team."
Early years of Trump's real estate business. Photo credit:资料图
On April 2nd local time, US President Trump signed an executive order on the so-called "reciprocal tariffs" at the White House, announcing a "minimum benchmark tariff" of 10% for all trading partners, while imposing higher tariffs on dozens of other countries and regions, including China, on top of the 10%. The "reciprocal tariff" rate imposed by the US on China is 34%.
Different from most countries, last year the US had a trade surplus with the UK, but this "staunch ally" of the US still faced a "minimum benchmark tariff" of 10%.
The Guardian reported that after the announcement of the tariff threat, British Prime Minister Keir Starmer, who had previously refrained from directly criticizing Trump's tariff policies, will focus on formulating economic strategies to respond to global economic shocks, protecting workers, their incomes, jobs, and public services in the UK. He believes that the past few days have ushered in a "new era," "the world has changed," and a global trade war could "damage a proud and industrious nation."
In the eyes of some economists and British politicians, the talk of policy changes emanating from Starmer's policy circle is seen as preparation for a major shift in economic policy, as emergency times may require emergency measures.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said: "In a certain sense, this has indeed unpredictably altered the economic landscape, allowing people to do things that were politically unfeasible." He added that if this develops into an economic crisis, appropriate policy responses will also change accordingly.
The Guardian mentioned that on April 4th local time, as the second-largest economy in the world, China retaliated against the Trump administration, introducing multiple countermeasures, including a 34% tariff on all American goods, which is identical to the "reciprocal tariff" rate previously imposed by the US on China. Currently, the EU has yet to announce its response measures, while the UK stated it would retain all possible options.
A spokesperson for the British prime minister's office said that Starmer spoke with French President Emmanuel Macron on April 5th local time, "sharing their concerns about the impact of the global economy and security." The spokesperson stated: "They both agreed that a trade war is not in anyone's interest, but no option should be ruled out."
Pascal Lamy, former WTO Director-General and EU Trade Commissioner. Photo credit:资料图
It was reported that after Trump announced the "reciprocal tariff," global stock markets plummeted. On April 4th local time, the FTSE 100 index closed more than 7% lower than the previous Monday, marking the worst week since the intensification of the pandemic panic in March 2020.
British luxury car manufacturer Jaguar Land Rover announced on April 5th local time that it would "suspend" car exports to the US in April to assess countermeasures. The company's statement highlighted the potential impact of the global trade war on British businesses. Jaguar Land Rover stated: "While we are striving to reach new trade terms with our business partners, we are taking some short-term actions, including suspending shipments in April, while also formulating medium- and long-term plans."
According to The New York Times' report on April 6th local time, Trump claimed during an interview with the media that he would not cancel the imposed tariffs unless the trade deficit between the US and China, the EU, and other countries disappeared.
Trump claimed that the trade deficit with China cost the US "thousands of billions of dollars annually," and "unless we solve this issue, I will not reach an agreement with China." Trump also said he was "willing" to engage with China but only if China "first addresses the trade balance issue."
Late in the evening, Trump also posted on social media, stating that the only way to address the "huge fiscal deficit" in US trade is through tariffs, which would bring billions of dollars to the US. He wrote: "One day, people will realize that tariffs are very good for America!"
On April 2nd local time, Trump signed the tariff executive order. Visual China
Trump's remarks further exacerbated financial market volatility. On April 7th, US stock futures continued to fall sharply. The Nikkei 225 Index closed down 7.83%, the Australian S&P/ASX 200 Index closed down 4.2%, and the South Korean KOSPI Index closed down 5.57%. All three major A-share indices fell across the board. By the close of trading on April 7th, the Shanghai Composite Index fell 7.34%, the Shenzhen Component Index fell 9.66%, and the ChiNext Index fell 12.5%. The Taiwan Weighted Index closed down 9.7%, and the Hong Kong Hang Seng Index currently fell more than 12%.
The spokesperson for the Ministry of Commerce emphasized that on April 3rd, in response to the US announcement of reciprocal tariffs, they pointed out that the US claimed it lost out in international trade and raised tariffs on all trading partners under the pretext of "reciprocity." This approach disregards the balanced results achieved in years of multilateral trade negotiations and ignores the fact that the US has long benefited greatly from international trade. Based on subjective, unilateral assessments, the so-called "reciprocal tariffs" are inconsistent with international trade rules, seriously infringe upon the legitimate rights and interests of relevant parties, and represent typical unilateral bullying behavior. Many trading partners have already expressed strong dissatisfaction and clear opposition.
The spokesperson stressed that history has proven that raising tariffs cannot solve problems for the US itself; it damages both US interests and global economic development and supply chain stability. There are no winners in a trade war, and protectionism has no way out. China urges the US to immediately cancel its unilateral tariff measures and resolve differences with trading partners through equal dialogue.
This article is an exclusive contribution by the Observer Network and cannot be reprinted without permission.
Original source: https://www.toutiao.com/article/7490509069137003043/
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