By Ussiju Medaner
What Donald Trump started in the United States of America since his return to the White House for a second term in office has disrupted the globe as it continues to shake and shatter a significant portion of all organised trade orders. Naturally and consequently, professionals and experts across the globe have continued to search for the common sense of non-relenting policy and have continued to wonder who stands to benefit from the front and back attacks by the day. Would the tariff policy benefit America instantly or sometimes shortly without substantially damaging the country’s global image? Or would the country have to pay dearly for what appears to many as an irrational and high-handed decision taken by Trump to massage his ego, just as much as his decision in the Russian-Ukraine war, the decision to terminate the US? Engagement in the UN, WHO, and several others. Of course, the more Trump is pushed by his desire to see other nations, most especially China, buckle and bow to him, the more the economy of his home state continues to tank. It continues its free fall as ranges of consumer goods prices continue to soar.
Yes, developing a country is about making decisions, tough, unpopular but necessary ones, but it appears that what Trump is doing is not making potentially beneficial decisions but making noises unique to his characteristics of drawing attention to himself and exerting himself on others. It appears so much that Trump would have more than anything wished to be a dictator and an authoritarian leader of the order of leaders he envies. The truth is that Trump would always want to be like Putin of Russia, like Xi of China and even the worst of them all, in North Korea.
For the avoidance of doubt, the existence of a global peace is connected to the existence and maintenance of a peaceful, considerate and mutually benefiting trading system that recognises strengths and weaknesses of nations. When this is broken, the tendency for world peace and orderliness to collapse is high and evident. For this purpose, the WTO was set up unanimously to address this correlation, which promotes free trade and sets rules for global trade, in place of the defunct General Agreement on Tariffs and Trade (GATT). By the agreement of nations, the WTO was responsible for setting rules for global trades, including rules on tariffs, subsidies, and intellectual properties.
Right now, Trump’s actions are synonymous with protectionism and have created trade tension that threatens the ability of the WTO to carry out its mandate. There are no known global trade rules right now. The front and back tariff attacks have thrown sanity into the air, and a silent trade war has commenced, which is capable of causing bigger damage if sanity is not restored as soon as possible.
Tariffs war among nations has not for once in history yielded projected results. Trump’s advisers should have told him this much, or perhaps they have told him, but he is either not interested in the outcome for the country, or he has his own expectations as an eventual outcome.
We all quite remember the Smoot-Hawley Tariff Act of 1930, which caused global uproars as it raised the US tariffs on imported goods into the United States and immediately received equivalent retaliatory responses from other countries, and eventually became a contributing factor, according to economists and political experts, to the Great Depression of the 1930s.
Responding to the global intention to favour trade liberalisation after World War II, the General Agreement on Tariffs and Trade (GATT) was established in 1947. Its main objective was to address tariff problems, reduce tariffs, and promote trade through multilateral negotiations.
Unfortunately, in recent years, we have seen several resurgences of protectionist policies across nations, leading to countries imposing tariffs on target imports beyond what is necessary and sensible. We have witnessed the US-China trade war; the US imposed tariffs on some Chinese goods, citing intellectual property theft, unfair trade practices, and an immediate retaliation from China. We have also witnessed the US-EU trade tension that saw the imposition of tariffs on EU goods, especially steel and aluminium, under the guise of national security concerns and, of course, an immediate retaliation from the EU. We have also seen the USMCA and NAFTA’s renegotiated trade agreements among the US, Canada, and Mexico, which have led to the imposition of new tariffs and quotas on specific goods.
Like what the world is witnessing now, has the tariff war ever ended well? No. It has always come with significant economic and political consequences across nations. Just like now, trade disruption across global supply chains is bound to take off, leading to shortages of essential goods and commensurate inflations with obvious consequences for the people’s purchasing power and the countries’ economic growth indices.
With the ongoing madness, we will begin to see massive disruptions in international trade, companies closing shops, moving businesses, and costs skyrocketing, coming with effects on all goods and products with more likely impact on the smaller, less developed nations with more dependencies on imported products. However, African nations must sit back this time to address their negative positions every time the world dangles in this trajectory. While everyone is a loser, both the country imposing the tariffs and the country being targeted, we, in Africa, often bear the brunt as we face responses from all of them on both divides. We are, unfortunately, in a position where we hold no control. Whatever happens among the contending nations is literally passed down to Africa as long as we continue to rely heavily on imports and exports to the United States and China, as well as other grossly involved nations. With the possible trade diversion efforts that are bound to come, we will struggle to adapt to the new global trade dynamics. We must be ready; the more global trade is harmed by the ongoing madness of Trump, the more our local economy will cave and get hurt because we have only built an economy that is never self-sustainable.
Nobody would end up a winner for whatever reasons adduced to the tariffs impositions. We will all become losers eventually, and our world will once again pay the price for the madness of Trump. Is the mad, anti-world order imposition of tariffs the only way to protect US industries and jobs and address the nation’s trade deficits, and what does Trump consider unfair trade practices? Can the US build competitiveness by forcing all other nations on their knees? I don’t think so. There are always better ways. As it is now, the US is bound to see consumer prices go up and the cost of businesses on the rise; and according to experts’ calculation, the after-tax income of average Americans would drop by a minimum of $1,300 per household and continue to drop if the war does not end soon. Yes, other nations will be hit more, including severe impacts on their systems, regardless of what responses they exert on the US.
On the other hand, the Chinese economy will undoubtedly experience uncertainty in its exports to the US as its products become less competitive in the US market due to the high tariffs. Whichever way, everyone will lose.
While the entire world receives hits and pressure from Trump’s tariffs war, the Americans must explicitly know that the bulk returns to their table. This war apparently would later become an affront to China. This nation would not succumb to whatever America throws at it, as it is in a better position than America. American imports from China are approximately a quarter of China’s imports from America. It is obvious that for every other dollar increase in tariffs paid by China by Chinese businesses to Americans, American businesses would be paying four times to maintain access to Chinese products. At the same time, China’s trade with the US is a negligible fraction of its trade volume, and the country can and would easily survive a pause while it negotiates alternative destinations for those goods. Can America do the same? Businesses are already suffering in the US, but pride is holding back Trump from repealing his unpopular tariffs policy.
Now that the reality is upon us, and the fact that Trump will not back down any sooner, we, African countries and Nigeria, must find the best way to respond to protect our trading system as much as our people. What do we have to do? We must devise a way to escape the full scope of Donald Trump’s tariffs. We must consider diversifying our trade partners by exploring new markets and strengthening trade relationships with other countries as much as possible to reduce dependence on the US and China. We should identify alternative destinations for most of our goods to drop the quantities of our exports to those countries that are obviously at war. We must also coordinate stronger regional trade agreements and economic communities to boost African regional trade integration and enhance intra-African trade volume and consistency.
Internally, it is about time we woke up to investing more consciously in our national economic development. Nigeria must focus on serious economic development strategies that promote industrialisation, infrastructure development, and human capital growth. To immunise ourselves from the effects of the international economic wars, now and in the future, we must take advantage of our population and abundant resources. We must consciously work to build a resilient economy and systems that are immune against corruption.
We must also recognise the fact that whether we like it or not, we are not in any position to project retaliatory responses like some other nations; instead, we should hold our anger at the disruptions and literally engage strategically by building stronger diplomatic relationships across nations, most especially along major trading partners that will enable us to negotiate strong and favourable trade terms and mitigate against potential negative impacts on our systems and economy. Finally, there would be opportunities arising where two big elephants are fighting for the clever small animals; we should be on the watchout to take all the advantages we can.
GOD BLESS THE FEDERAL REPUBLIC OF NIGERIA!
