'Wild West' tariff threats challenge and chance

Almost all economists agree that a global trade war is a losing game for all, and will disrupt supply chains, inflate prices, defy the principles of comparative advantage and challenge World Trade Organization rules. Yet United States President Donald Trump sees tariffs not as an economic risk, but as a strategic tool — one he is prepared to use again. His latest tariff proposal, if implemented, will undoubtedly strain trade relations, but it also presents an opportunity for China. Rather than reacting with panic or escalation, China and its businesses should adopt a strategic, measured approach to mitigate immediate risks while accelerating long-term supply chain diversification, innovation and expansion into new markets.

Despite broad consensus that a Wild West-like tariff war undermines efficiency, deters investment and risks a global recession, Trump considers tariffs a "beautiful word".Why is that?

The logic is threefold. First, trade deficits are an easy political target — simple enough for voters to understand, particularly workers who have been told that US manufacturing jobs have been lost to cheap foreign labor. Second, given its large consumer market and trade deficit, the US can impose more economic pain on its trading partners than they can inflict in return. In a tariff war, Washington assumes it can outlast its rivals. Third, the US economy is less dependent on trade than its major competitors. Exports and imports account for roughly 25 percent of US GDP, compared to 35 percent for China and 90 percent for Germany. While tariffs hurt all sides, Trump's advisors believe Washington can afford to absorb the shock better than others.