Opinion Thanks to Trump, uncertainty in the global trading system is likely to persist

The 90-day pause granted earlier on Donald Trump’s reciprocal tariffs has come to an end. While Trump’s team may have been hopeful of signing quick deals —in the initial days, there was talk of closing 90 deals in 90 days — the actual progress made by the administration has been considerably below expectations. Agreements have been struck only with the UK and Vietnam and a framework has been agreed upon with China. More deals are on the cards. Revenues, though, have surged. According to reports, US tariff revenues soared to $22.8 billion in May. Treasury Secretary Scott Bessent is hopeful of revenues touching $300 billion by the end of 2025. But, marked by unpredictability, Trump’s tariff policy, on which questions of legality have also been raised, has only increased uncertainty in the global economy.

The last few days have seen a flurry of tariff announcements. On Monday, Washington sent letters to 14 countries detailing the tariffs imposed on them. These are now effective from August 1. According to reports, US imports from these countries stood at $465 billion last year. The tariffs levied range from 25 to 40 per cent. Even US allies like Japan and South Korea have not been spared. Six of the 14 countries belong to ASEAN — Cambodia, Indonesia, Malaysia, Thailand, Laos, and Myanmar — a grouping that has deepened integration with China. As per reports, the letters, in line with the US-Vietnam agreement, which doubles the tariff for transshipped goods, also say that “good transshipped to evade a higher tariff will be subject to that higher tariff”. This seems to be aimed at China. A recent note from Nomura, an investment house, had pointed out that “Asia is experiencing a significant surge in imports from China, raising concerns about potential transshipment activities”. Countries such as Japan, Thailand and Malaysia have responded by saying that they’ll continue to hold discussions and negotiate with the US. Trump, however, has not stopped there. Following his levies on commodities like steel and aluminium on Tuesday, he announced 50 per cent tariffs on copper. The markets reacted immediately — copper futures soared around 9 per cent. That’s not all. The US President has also threatened to impose up to 200 per cent tariffs on pharmaceuticals. He has also warned that members of BRICS would face a 10 per cent tariff.

Advertisement

Trump’s tariff policies have upended the global trading architecture. The Global Trade and Research Initiative, a Delhi-based think tank, has underlined that these agreements do not meet WTO standards for FTAs. If Trump’s past approach is anything to go by, there is a possibility that the tariffs imposed today could be revised tomorrow. The uncertainty in the global trading system is, therefore, likely to persist.