Global Trade Wars: Lose-Lose (News Review Week 14/15)

The United States has unleashed the dogs-of-war in the form of global tariffs around the world on Liberation Day, April 2nd, as declared by President Trump.

White House Executive Order “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits” action taken on April 2, 2025, declares a national emergency arising from the U.S. trade goods imbalance. Trump named the April 2nd Emergency Executive Order “Liberation Day.”

Put simply, most of the world simply has not been willing to import their fair share of U.S. made trade goods. President Trump demonstrated how to correct this by holding up a large chart showing the new tariffs proposed for the world. The Trump Administration, whether it is the Secretary of Commerce or the U.S. Secretary of the Treasury or the Office of the US Trade Representative has put forth its formula for calculating tariffs. Basically the calculation simplifies to:

U.S. Trade Tariff = (Trade Deficit)/[(Imports)(2)]
where trade deficit is the net difference in imports by the foreign nation, and imports are based upon how much U.S. imports from the foreign nation. The ratio is divided by 2 for a “generosity factor.”

The tariffs charged are listed in a downloadable PDF file called “Annex 1.” While Trump issued subsequent Executive Order of a three-month postponement for all nations except China, there are no other exceptions except for differently tariffed raw material or bio/chemical resources shown in Annex II. Trump has tacked on punitive duties due to the border emergency (previously declared under an Executive Order on Day 1) of 25% on Mexico and Canada with energy resources being the exception. There is a global tariff imposed of 10%.

Here is the initial tariff proposed for the People’s Republic of China:

U.S. Trade Tariff = ($295Billion China’s U.S. Trade Deficit)/[($439Billion U.S. Imports)(2)] = 0.67/2 = 0.34 (100%) = 34%

That is what was initially shown on Annex 1 for China. However in the confusion that followed including China balking that this violates the World Trade Organization Trade Rules, China decided to launch a retaliatory tariff. What followed was an escalation in tariffs rising from the US imposing an initial 10% to now over 145%. Here is how they add up over time:

(10% February 1st) + (10% March 4th) + (34% April 2nd) + (50% April 7th) = 104% < 145% Minimum Tariffs on China Exports Effective Immediately since April 10, 2025

There are separate tariffs levied for foreign exports to the U.S. such as 25% for all steel and aluminum, whether from Canada or China; additionally there are proposed automobile and autopart tariffs. Especially prohibitive is the import of electrical vehicles from China. Additional duties are levied that close the exemption for de minimus packages, subjecting them to 120% of shipment value or $100 fee beginning on May 2nd. That rises to $200 dollar de minimus duty beginning in June 2025. Special tariff charges of over 270% apply to China-origin solar panels.

The Executive Order makes clear that second or third party resellers or fulfillment center retailers of China-made exports to the USA will be penalized if they try to evade the duties. The document notes that there are also additional duties, fees, taxes or charges applicable to these exports. Warnings over evasion are explicit:

Section 3 Implementation Paragraph (j): “To reduced the risk of transshipment and evasion, all ad valorem [value-added] rates of duty imposed by this order or any successor orders with respect to articles of China shall apply equally to articles of both the Hong Kong Special Administrative Region and the Macau Special Administrative Region.

Section 4 Modification Authority (b) “Should any trading partner retaliate against the United States in response to this action through import duties on U.S. exports or other measures, I may further modify the HTSUS [Harmonized Tariff Schedule of the United States] to increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.”

(d) “Should U.S manufacturing capacity and output continue to worsen, I may further modify the HTSUS to increase duties under this order.”

The timeline for the escalation was recently explained in detail at CGTN in a report and The Point discussion, “Trump’s Second Term Reckoning: Trade Wars and Trust Deficit”  In the video, guests discuss how the new US administration is facing a severe global trust crisis. Zhao Hai, from China’s National Institute for Global Strategy, expresses that this is destructive to the bilateral relationship, but that it was not unexpected, considering the tariffs Trump imposed during his first administration. He believes that the fentanyl crisis is really an excuse. And that China must be resolute and not submit to this type of bullying. In fact, Trump is becoming a threat to other areas of global governance, such as quitting the Paris Accords, not honoring international agreements or ignoring World Trade Organization Rules.

USA wants to negotiate bilaterally with each country to establish a new political trade order

There are ways to meet, discuss the issues, and create a win-win cooperation framework. Otherwise Executive Order Annex 1 is noticeable for its omission of an important country that provides illicit drugs all around the world. Afghanistan is exempt from tariffs, but it likely has a big trade deficit with the U.S. In contrast, very poor nations that offer the United States precious resources are still listed in the Annex. This was brought to attention by economics professor Dr. Warwick Powell in a recent discussion at World Affairs in Context (Lena Petrova), and also in his article, “Never Look a Gift Horse in the Mouth” from April 3, 2025, from his blog, WarwickPowell.Substack.com.

Powell’s two main points are first, that the tariffs are the wrong kind of medicine because the hollowing out of manufacturing began long before China joined the World Trade Organization in December 2001. Large transnational corporations had long shipped any processing and manufacturing jobs they could out of America to optimize profits. Productivity has become not only mechanized but dominated by artificial intelligence and robots. Bringing manufacturing back thus faces extreme challenges because it requires workers with advanced variety of flexible technological and diagnostic skillsets. Second, the extreme financialization of the U.S. economy has created a variety of emphasis on short-term gains such as playing the stockmarket, real-estate, banking, boards and mergers, and processes which suck the money out of the country into safe-havens such as Panama’s offshore accounts. Gaming the market has captured even Congress, with their campaign financing unable to exact any kind of meaningful reform, but with PACs allowing for endless money-raising.

The real question is whether the U.S. has the will to commit to making industrial development more attractive than the finance economy? Can America commit to the substantial amount of fixed capital needed for importing the types of machines and intermediate goods that it needs for manufacturing startups? Will we be able to provide a supportive eco-system in energy and communications investment? Globalization is so extensive that most countries today are reliant on foreign made goods from all around the world for anything electronic.

In his blog, Dr. Powell also mentions the fact that small poor nations must pay no matter how far down in the value chain their workers are. He questions why African nations such as Namibia, South Africa, Botswana, and Lesotho are levied such high tariffs. The only explanation is that these nations are not importing enough American-made goods. He writes:

“Thus, in the case of Lesotho, it exports about $236 million each year, mainly consisting of diamonds, textiles and apparel, while it imports $7 million. Such a low level of imports are a function of the fact that most Lesotho residents earn no more than $1,300 per year; American-made goods are simply out of their price range.” — Dr. Warwick Powell, Queensland University

For Lesotho: The calculation is ($229million U.S. trade deficit)/[($236million goods exported to U.S.)(2)] = 49% rounded up to 50% as shown on Annex I

Obviously a similar trade imbalance exists with Madagascar, Fiji, Falkland Islands, Cambodia, Burma, and even Lichtenstein. These nations may not have to import very many goods, and they are not heavily financialized. For instance, they still live off the land, and can get away with barter economy to meet their needs from neighboring countries. But the U.S. wants to coerce them to accept more U.S. trade goods, whether it is in the form of military equipment, airplanes, higher priced manufactured goods, agri-business, or pharmaceuticals. Either way, these nations will be coerced into accepting more American goods, offered more credit than they can afford, or impressed into Western military service.

Nevermind that in the case of Lesotho, those are “blood diamonds” being offered for export: they either work in dangerous mines, or create textiles, or work tiny plots of land. Our leaders, such as JD Vance, would approve if these nations are coerced into accepting more American goods, offered more credit than they can afford, and/or impressed into Western mercenary service. In any case, they should remain labor-intensive economies, trapped as bottom feeders, like Native-Americans serving as slaves inside of a Catholic mission.

But the question arises whether or not the Trump Tariff tables are even legitimate from a logical economic standpoint. FactCheck.org‘s article “Trump’s Misleading Tariff Chart” reveals that many economists express skepticism because the tariffs are much higher than published WTO average tariff rates. This is admitted by the Trump administration because the Trump tariffs also took into consideration ‘Currency Manipulation and Trade Barriers’ although exactly how that applies to the Global South remains to be explained.

Economists Criticize Trump Tariff Rates

Statements have been offered by media personalities, doctorate economists such as Jeffrey Sachs, Richard Wollf, Mike Hudson, and even Nobel Prize Economist Joseph Stiglitz.

However FactCheck article’s economists noted that the White House equation focuses only on traded goods. If one takes into consideration U.S. trade in services (foreign students sent to study in America, paying for expertise in medicine, engineering, finance, energy, telecommunications, etc.) then there likely is not such a trade imbalance. Small poor nations pay in innumerable ways for U.S. trade services not factored into the Trump Trade Tariffs.

“We do not believe it is an appropriate or accurate measure of trade barriers…We believe their methodology basically has nothing to do with reciprocal tariffs as the administration had previously discussed. The most charitable interpretation of what they are saying is ‘this is the tariff rate that would be necessary to balance bilateral trade with each partner.'” —William Reinsch, Sr. Advisor at the Center for Strategic and International Studies, Former President of the National Foreign Trade Council

“That skews the results…The U.S. has a comparative advantage in services, and this ignores our substantial trade surpluses in that sector.” —Kimberly Clausing, Sr. Fellow at the Peterson Institute for International Economics

“Excluding services is simply wrong and doesn’t give the full picture.” — Stuart Malawer, Professor Emeritus of Policy and Government at George Mason University

Technically speaking the Trump definition of a Tariff Rate is basically nonsense.

Vlogger Cyrus Janssen, an experienced China-expert, entrepreneur, investor, and world golfing champion pointed out recently in “Japan Shocks the World! Chooses China as Trump Trade War Backfires!” that the more scientific expression is based on the amount of customs duties paid over the amount of exports from that country.

Tariff rate = (Total amount of customs duties collected)/(Total value of imports from foreign country)

For instance if Indonesia exports $28billion dollars worth of good, and the customs duties collected is $560million, then the tariff rate would be:

Tariff rate = ($560million duties collected)/($28 billion worth of goods) = 0.02 (100%) = 2% Tariff Rate for Indonesia

Instead the Trump Tariff, based on the alleged U.S. trade imbalance that Indonesia does not import enough U.S. trade goods is much higher

Trump Tariff = (Foreign Trade Deficit)/[(Country’s Trade Export to USA)(2)] where the factor of 2 is a “generosity factor”

For instance if Indonesia has an $18 billion U.S. trade deficit, but exports $28 billion dollars worth of goods to the USA, the Trump Tariff is calculated as

Trade Tariff = ($18 billion trade deficit)/[($28 billion trade export to usa)(2)] = 0.64/2 = (0.32)(100%) = 32% as listed on Annex 1

This is why so many economists are asserting that the Trump Tariffs are only based on the alleged U.S. Trade deficit that a foreign nation has with the U.S., and it is not based on real science. The danger is that these tariffs will create instability not just within the U.S. but also around the world, since so much of the economy is now globalized. Factories import parts made in China or are sourced indirectly from China, yet now Trump wants a boycott on China? (Recall the irony that America penalizes people who encourage BDS on Israel for its many and various genocidal abuses of the Palestinian people.) Many are also worried that this trade war by Trump (following the Project 2025 recommendations) will not only cause inflation or stagflation, but will push even more manufacturing offshore because of the inability to obtain parts and components made in foreign countries, especially from China.

History Repeats Itself: Great Collapse

Small poor countries might be resentful, but so ultimately will American consumers when their medications, automobile parts, and supply line components do not arrive. They will become frustrated when inflation increases instead of decreases, as President Trump promised. And they will be protesting when they are laid off because Canadian tourists are boycotting the United States, there is no inventory to process in the shipyards, and online retailers no longer can earn a living. The people who will be hit the worst will be the working class and middle class: plumbers, truck drivers, small businesses, finishing companies, warehouse workers with domino-effects feeding upward.

Assembly-line based economies whether located in Singapore, Philippines, or Vietnam will not be able to tell if their supply chains are reliable or legitimate when those brands can no longer sell as “Made in China.” Fulfillment centers may be jailed or shut down if they are identified as operating as “Made in China” intermediaries. Millions of workers in China are going to be forced out of work because American retailers no longer want their business. According to China scholars at Dotdotnews.com, “‘Tariff war’ escalates: Chinese scholars’ in-depth analysis and strategic outlook” the tariff wars are based on naked U.S. capitalist interests first and foremost.

“Yu Nanping, a professor at East China Normal University, criticizes the Trump administration’s recent ‘reciprocal tariffs’ as a unilateral move focused solely on U.S. interests. He argues that this policy undermines the consultative and mutually beneficial frameworks established during globalization. According to him, such coercive trade measures not only fail to resolve global economic imbalances but may also intensify trade tensions and further fragment global supply chains.”

According to Dr. Shiva Ayyadurai, in a featured May Day lecture recently, “The Great Economic Scam EXPOSED: Tariffs, Free Markets, and the Swarm’s Exploitation of Working People,” “Free market and tariffs are just instruments among the gangsters to get more pieces of the pie for themselves.”

Basically historically whether it was Britain or the United States, the trade has always swung in cycles of “protectionism” when stiff tariffs were imposed versus “free trade” when the colonialists forced weaker nations to open-up their resources for exploitation. He furnished a colorful and painful example of how during the 18th century, when the British Empire wanted to exploit India, they first advocated for “free trade.” However the quality of Indian textiles and weaving was so good that it threatened the trademills in Manchester, England.

So by brute force, the British Empire imposed “trade protectionism” upon India. “They cut off the thumbs of 5,000 Indian weavers​. That’s right—literally maimed workers to protect corporate interests,” Dr. Shiva explains, “Today, instead of thumbs, they cut off your job prospects. They cut off your dignity. They ship your manufacturing base overseas. And then they have the audacity to blame China or Mexico or some poor immigrant neighbor next door.”

“And this is what’s happened in every industry in the United States. Wall Street and Silicon Valley have been outsourcing their stuff to these poor countries. And where did all that money go? Well, if you look at the data over the last 30 years, the United States imperialism fueled by Wall Street and Silicon Valley started 30 different wars and spent $16.9 trillion.”

The industrialists have grown filthy rich off the poor workers overseas, yet in the mad chase for profits, they realize that the profits have “leveled off” due to such high efficiency and productivity. As others have commented, Dr. Shiva believes that a plan to collapse the dollar is underway. It would allow for massive U.S. debt forgiveness. It could destroy China and allow for hostile takeover of that nation. It can allow the globalists to herd everyone into AI-based virtual global currency and surveillance systems. Everyone would be so desperate for a sense of stability, just like during the Covid-19 pandemic, that they would not be able to say no to the proposed panacea.

All this was preventable if the United States increased productivity on American soil by doing what China did, investing in its own infrastructure, growing its economy also from the inside out, thereby creating many more productive jobs and thriving related businesses. Because as the Brown University Watson Institute studies have shown, military jobs simply do not create the number and variety of sustainable local cooperative neighborhood economies of scale that properly administered FDR New Deal infrastructure projects have inspired in the past.

America keeps investing in wars of provocation, policing the world, and Project 2025 is, in fact, a manual recommending war with China. China knows this, Russia knows this, and so do many other nations, whether in BRICS or in the Global South. Whether Trump is dealing a dead hand or being used as an alternative globalist puppet, the Truth-Freedom-Health movement by Dr. Shiva Ayyadurai is working to mobilize people to organize, educate, and build their way out of this “orchestrated collapse.”

Timeline Image from CGTN.com

Article and analysis by Christine H. Kroll, M.A., P.E.