Global businesses are the latest victims caught up in President Trump’s tariff web, threatened with higher costs if they don’t manufacture in the US.
But yesterday, at the World Economic Forum (WEF) in Davos, World Trade Organization (WTO) director general Ngozi Okonjo-Iweala suggested there was no need for panic – “let’s not hyperventilate”, she said.
Mr Trump has claimed his administration is “acting with unprecedented speed to confront “the economic chaos”, that had landed the US in “the biggest inflation crisis in modern history”.
“Food prices and the prices of almost every other thing known to mankind went through the roof,” he said.
The president has made it clear during his first week in office, and during his election campaign, that one way he would endeavour to ease inflation would be through import tariffs, despite analysts claims that they will have the reverse effect as the costs get passed down the value chain to US consumers.
Over the past few months, Mr Trump has been erratically designating tariffs on imports from various countries, with sporadic implementation dates, including 25% on shipments from Canada and Mexico, 100% on those from China – or is it 60% – and 10%-20% on those from everywhere else.
And now it’s not just countries in the firing line – yesterday, at the WEF’s annual meeting in Davos, Mr Trump turned his attention to businesses.
His face projected on an IMAX-style screen, Mr Trump said: “My message to every business in the world is very simple – come make your product in America and we will give you among the lowest taxes of any nation on earth.
“But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff, differing amounts, but a tariff that will direct hundreds of billions of dollars, and even trillions of dollars, into our treasury.”
He concluded: “Under the Trump administration, there will be no better place on earth to create jobs, build factories or grow a company than right here in the good old USA.”
But, as CEO of consultancy SASI World Stan Wraight has previously told The Loadstar, if other countries retaliated, competition for international US businesses would be reduced, which would be particularly detrimental.
“Excluding world markets is a very short-sighted policy to run a business. Especially in an ecommerce world where shippers globally can market their products directly to consumers and have them at your door in three-five days from anywhere in the world, at prices no domestic cost-burdened company can compete with,” he said.
Indeed, the WTO’s Ngozi Okonjo-Iweala said during the WEF “debating tariffs” panel yesterday: “If you use tariffs, they could well temporarily reduce deficit, but ultimately there are other issues that come with that.
She explained that tariffs “are inflationary, they can make the exchange rate depreciate, make your exports uncompetitive, and you come back to the point where your deficits are rising again”.
However, Ms Okonjo-Iweala assured that “there is resilience” in world trade.
“80% of world trade right now is taking place on WTO terms and is at a peak of $30.4 trillion, which is higher than pre-pandemic. But does that mean I’m not concerned? No, I just sense a lot of hyperventilation,” she said.
“Tariffs are used quite often to solve something that is not the fault of trade, and sometimes trade is unfairly blamed for things that are not really resulting from trade.
“Let’s not hyperventilate. I know we’re here to discuss tariffs, but could we chill?” Ms Okonjo-Iweala concluded.
Source: https://theloadstar.com/trump-threatens-shippers-manufacture-in-the-good-old-usa-or-pay-the-price/
