The real culprit on trade

It is China, not Donald Trump, which has destabilised the multilateral trading system

- MIHIR S SHARMA

American President Donald Trump's tariff rampage appears to have fatally wounded the global trading system. The United States' (US') mercurial President declared during his campaign last year that "tariffs" were his favourite word, and his actions in office seem to indicate that, on this occasion at least, he was telling the unvarnished truth. India, in spite of hopes that recently announced trade negotiations would delay the inevitable, is not going to be spared: Mr Trump told a right-wing news outlet in the US that India, too, would be hit by tariffs on April 2.

Such trade measures are an escalation, but also a culmination of actions taken by the US since Mr Trump was first elected in 2016 and took the country out of the Trans Pacific Partnership. The interregnum of a Democratic administration under President Joe Biden did little to reverse Mr Trump's original actions destabilising the global trading order.

Indeed, in some ways Mr Biden intensified the US' war on trade. It was he who added the wide use of sanctions, technology restrictions, and protections, as well as a subsidy and spending war, to the tariff measures of his predecessor.

It would be easy therefore to blame the US entirely for the destruction of the global trading system. But that is only part of the story. Unless the rest of the story is properly understood, we will not be able to repair the damage that has been done.

The fundamental flaw at the heart of how international trade in the era of the World Trade Organization (WTO) functions is the polite assumption that all economies are similarly structured. In other words, that costs, subsidies, and protections are transparent.