Multilateral Tariffs Are The Answer

Trump's tariffs have caused global apprehensions. The order established through a controlled multilateral trading system has dissipated, and confidence is low

- K M CHANDRASEKHAR

I have no pretensions of being an economist. I completed an honors course in economics at Delhi University, but that was half a century ago. By a quirk of fate, I spent nearly two decades dealing with foreign trade in various capacities with the Kerala Government and the Government of India. I am bewildered by Donald Trump's antics that threaten the very fabric of the global economy. He imposed tariffs, then kept them on hold when he found he was losing the game, yet continued with a 125 percent tariff on his most significant trading partner, China.

Trump is obviously very angry. He feels that the entire world, particularly China, has conspired to rob the U.S. To teach these 'rogues' and 'thieves' (he used the word 'thieves' repeatedly) a lesson, he decided to come down on them like a ton of bricks. He announced the imposition of what he calls "reciprocal tariffs" on all countries, with a minimum of 10 percent and a maximum yet to be determined. When China dared to challenge him and impose equal counter-tariffs, he raised the tariff on them to 125 percent.

I fail to understand how he deems these tariffs "reciprocal." A reciprocal tariff, or retaliatory tariff in WTO parlance, is intended to correct a wrong committed by a country that violates a multilaterally or jointly agreed tariff. In this case, all tariffs have been established multilaterally after several years of rigorous negotiations by all countries, including the U.S.