(Yicai) March 5 -- The United States government imposing reciprocal tariffs on its trading partners seriously deviates from multilateral trade rules. It is a fundamental disruption to the international trade order and is unlikely to achieve its expected economic and political results. Instead, it will eventually harm the US and others, proving to be a losing policy.

Unilateral Act of Substitution of Concepts

Reciprocal tariffs are a deliberate misinterpretation of the concept of reciprocity in international trade, a unilateral act of substitution of concepts.

In the context of international trade, reciprocal does not mean equivalent as the US claims, but rather mutual benefit, which refers to two countries mutually granting each other preferential treatment in trade. The essence of reciprocity lies in dynamic balance rather than static equivalence and is based on the overall balance of rights and obligations reached through multilateral negotiations.

The US ignores its tariff commitments within the World Trade Organization, raising its tariff levels to those of developing or least developed countries and demanding other members to reduce their tariffs to the same level as the US.

This simplistic and crude equivalence ignores countries’ differences in economic structure, industrial advantage, and trade status. It uses mathematical equality to cancel development differences and overlooks the principle of comparative advantage that assures mutual benefit and win-win results.

Moreover, the right to judge whether something is equivalent lies with the US, according to the logic of the US government. Anything that goes against the principle of 'America First' may be regarded as non-equivalent. This self-serving equivalence standard is essentially a misinterpretation of international trade rules.

Multilateral Trade Rules Trample

The multilateral trading system with the WTO at its core, established after World War II, advocates that members resolve trade issues through equal consultations and multilateral negotiations, reduces tariff barriers, and promotes trade liberalization and facilitation. However, the US idea of reciprocal tariffs deviates from the multilateral trading system in many ways.

This behavior seriously violates the WTO's principle of unconditional most-favored-nation treatment and tariff-binding commitments. It is a selective trade restriction based on US interests, so it undermines the non-discriminatory environment advocated by the most-favored-nation treatment and goes against the characteristic of the unconditional most-favored-nation treatment, making trade relations full of uncertainties and conditions.

Moreover, the US government unilaterally imposes reciprocal tariffs on other countries and arbitrarily raises tariff rates, ignoring the tariff reduction agreements reached through multilateral trade negotiations within the WTO. This clearly violates its tariff-binding obligations.

Even more seriously, this trade policy revolution under the banner of 'America First' will not only subvert the multilateral trade consensus that has been in place for more than 70 years but also push the international community to the tipping point of unilateralism. As tariffs replace rule-based dialogue, and zero-sum games replace mutual benefits and win-win results, the global trade system is experiencing the most severe legitimacy crisis since the establishment of the General Agreement on Tariffs and Trade in 1947.

Difficulty in Solving the US' Own Trade Imbalance Problem

The US' expectation of reducing its trade deficit and solving the trade imbalance with its trading partners through reciprocal tariffs will ultimately be just a pipe dream. It will inevitably encounter the ruthless counterattack of economic laws and the firm countermeasures of other countries.

Reciprocal tariffs will prevent countries from stably conducting international trade based on the established principle of most-favored-nation treatment. Enterprises will find it difficult to accurately predict trade costs and the market environment, undermining the stability of the global industrial and supply chains and disrupting the normal international trade order.

Moreover, reciprocal tariffs are unlikely to enable the US to achieve the goal of reducing its trade deficit. In the past few years, the US goods trade deficit has not only not decreased but increased instead, proving that imposing tariffs is ineffective in alleviating a trade deficit problem.

Hiking import tariffs will also increase the prices of imported goods, which will lead to higher living costs for American consumers. Afterward, the production costs of US enterprises will also rise, especially for those that rely on imported raw materials and components, significantly weakening their competitive advantages.

In addition, the trade war will result in a decrease in orders for US exporters, production cuts, and even business closures, with more and more workers losing their jobs. Eventually, it will suppress the economic growth of the US.

The US government's reciprocal tariffs policy is shortsighted and self-defeating. Countries worldwide should unite to jointly resist the US' trade bullying behavior, safeguard the authority and effectiveness of the multilateral trading system, and promote the development of global trade towards a more fair, open, and inclusive direction.

(The author is the dean of the School of International Organizations at the Shanghai University of International Business and Economics)

Editors: Tang Shihua, Futura Costaglione