By P. Gunasegaram
A bully is only stopped by strength
There is an easy way to beat Donald Trump’s divide and conquer approach to tariffs which forces nations to buckle to unreasonable import duties and restrictions, openly defying international rules and norms.
That is to simply take a unified, common approach to tariffs. If just the European Union (EU), BRICS (Brazil, Russia, India, China, South Africa) and Asean take the lead to force Trump into true negotiations, things will change.
Trump cannot fight it without considerably damaging US interests. Other nations not part of these three groups can be welcomed into this unity circle to take a joint stand on the tariffs, especially partners under other trade arrangements.
To provide greater international legitimacy, the group can seek the assistance of the World Trade Organisation or WTO to seek a common agreement on tariffs. The WTO has played no active part in this so far, despite the US being a member state.
The WTO claims to be the only global international body dealing with trade rules between nations. Its agreements are negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. But its role has been usurped by Trump, apparently.
Look at the reasons for some of Trump’s tariffs, and it becomes clear that not all of it is due to trade issues. Brazil has been slapped with tariffs for refusing to stop prosecuting a former president on graft charges as demanded by Trump. How intrusive is that!
India is facing punitive tariffs because it is buying oil from Russia. But the US itself buys products from Russia and many other countries buy oil from Russia as well, including China. The transactional nature of Trump’s approach is to load anything on the negotiating wagon, whether fair or foul, whether reasonable or insane.
A schoolyard bully
He acts like a schoolyard bully who uses all the power and strength available to him and his gang to terrorise others into accepting, at least in part, his horrendously sky-high demands but agreeing to much lower but still very high figures later.
The only way to counter a bully is to marshall all others against him and his gang. It looks like the US has few allies and it is already alienating or has angered many of them already, the stand-out example being Canada and Mexico, its immediate neighbours.
It’s really not difficult to do because the rest of the world is much larger than the US.
Source: Wikipedia (https://en.wikipedia.org/wiki/International_trade)
The largest trading bloc in the world in 2024 was the EU (see table, compiled from WTO figures ) with US$8.6 trillion trade in both goods and services. The largest trading nation was the US with US$7.4 trillion followed closely by China with US$7.2 trillion, and Germany with US$4.31 trillion.
Asean at number 4
Do note that Asean (not in the table), as a bloc comes in at number four with US$3.6 trillion in the trade of goods and US$1.1 trillion in services to give a total of US$4.7 trillion. Asean is hugely important in trading.
China, EU, Asean, Japan with US$1.9 trillion, India with US$1.8 trillion and South Korea with US$1.6 trillion, already account for US$25.8 trillion or 3.6 times the US figures. If all countries are included it’s likely to be four times.
If the world unites, the tables will be turned. If the US does not comply with international norms, the rest of the countries can easily agree among themselves to impose duties on imports of US goods at the same rate the US sets on other countries – that’s all it takes
Others catching up with the US
If all other countries agree, then the US will gain no advantage by setting extra duties and the world will go back to a more normal norm and set reasonable duties among themselves, using as an arbiter the WTO which has so far not played any role in the current round of disruptive tariffs.
Also, the other countries are also catching up with the US in terms of income, as measured by the nominal gross domestic product – sum of goods and services produced at current prices (see table)
Biggest economies in 2024 by gross domestic product
Source: The 50 largest economies in the world
An estimated 25% of world output is accounted for by the US. EU, Asean, China, Japan. Brazil, Russia and Mexico account for nearly US$40 trillion of global output, eclipsing the US. In terms of economic power. The rest of the world produces three quarters of world output, enough to trade among themselves without the US.
Yes, the US is a superpower, but with Trump irritating and hurting almost the rest of the world, it is time that the rest unite against the US and bring it back into the fold of world economic, and political, order.
The world can no longer let one nation, no one man, dictate terms to the rest of the world. It has the means to stop it and it is time the world leaders did it or forever be held in contempt by their own people for standing by and letting an infantile, insane bully take over without fighting back..
P Gunasegaram says solutions are often easy, it’s the leaders that are the stumbling blocks.
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