Trump and Merz Lock Horns: Is it True that Merz is Being Run Over Politically by Trump?
In a move aimed at rebalancing trade relationships, President Donald Trump has signed letters outlining tariff rates for goods from 12 countries, including Vietnam, to be imposed on their exports to the U.S. This decision, part of Trump's trade strategy that assumes the U.S. as the largest market in the world, could have far-reaching implications for U.S.-Vietnam trade and China as a rival.
Vietnam, a significant exporter to the U.S., agreed to a deal where its exports would face a 20% tariff rate, significantly lower than the initially proposed 46% reciprocal tariff. However, goods deemed to be transshipped would incur a higher 40% tariff. In return, Vietnam agreed to drop all tariffs on U.S. imports, effectively opening its market to U.S. products without tariffs. This move is expected to boost U.S. exports to Vietnam, potentially bolstering economic ties between the two countries.
However, the emphasis on preventing transshipping might complicate trade dynamics if Vietnam relies heavily on Chinese goods. The 40% tariff on transshipped goods is largely seen as a measure to counter China's practice of using transshipping to evade U.S. tariffs. By targeting transshipping, the U.S. aims to reduce China's ability to circumvent tariffs, which could diminish China's competitive edge in U.S. markets, potentially benefiting both U.S. and Vietnamese exporters.
The U.S. strategy might also pressure China to reconsider its trade practices and negotiate more favorable terms directly with the U.S. However, China's economic size and influence could limit the effectiveness of such pressure.
Meanwhile, the Trump administration has scrapped planned free trade agreements such as TTIP with Europe and TPP with the Asia-Pacific region. As negotiations between the U.S. and the EU continue, economist Folker Hellmeyer expects tariffs for the EU to be between 10 and 20 percent.
The implications of these tariff policies extend beyond trade, as the Trump administration has also dismantled international organizations that constrain the power options of the U.S. government. The abolition of the dispute settlement system of the World Trade Organization (WTO) raises questions about the future of global trade governance.
In the domestic arena, the stimulus package follows the concept of Ronald Reagan: lower taxes and high deficits. However, Trump has forced the Republicans to agree to his new stimulus package, significantly increasing government spending and temporarily driving up the national debt.
The Trump administration's tariff policies and trade strategies continue to reshape the global trade landscape, with potential implications for the economic strength and strategic positioning of major players like China and the EU.
- The 40% tariff on transshipped goods may prompt Vietnam to reassess its reliance on Chinese goods, given the complexity it introduces to trade dynamics.
- The U.S. tariff policy towards Vietnam and its decision to scrap free trade agreements with Europe and Asia-Pacific could influence the EU to revise its trade practices and perhaps negotiate more favorable terms with the U.S.
- The dismantling of international organizations by the Trump administration, such as the WTO, and the implementation of tariff policies are indicative of a broader shift in U.S. politics and policy-and-legislation, affecting general-news and global trade governance.
