The 'unstoppable' US tariffs
Once again, the United States has found a new reason for excessive tariffs.
The Office of the United States Trade Representative announced on the 23rd that under Section 301 of the 1974 Trade Act, tariffs ranging from 10% to 12.5% will be imposed on 60 countries and regions under the pretext of so-called "forced labor".
From the International Emergency Economic Powers Act to the 1974 Trade Act, from Section 122 to Section 301... when a tariff "doesn't work," the US government quickly seeks new tax reasons; When one legal tool is restricted, another tool is immediately activated. However, the names are changing, and the logic of protectionism remains unchanged; The tools are changing, but the path of unilateralism remains unchanged.
Old wine in a new bottle
In February of this year, the US Supreme Court issued a ruling that the International Emergency Economic Powers Act did not authorize the President to impose large-scale tariffs. Subsequently, the United States announced the imposition of a global tariff of 10% on all countries for a period of 150 days under Section 122 of the 1974 Trade Act. Now that this deadline has expired, the US government has invoked the "Section 301" as a tariff "renewal".
US Trade Representative Greer argued that the new tariff measures could enable US trading partners to implement similar "forced labor" product bans as the US, "thereby improving worker welfare". However, in the process of the United States repeatedly imposing tariffs, this sophistry has been criticized by multiple parties.
Richard Neill, a Democratic member of the House Ways and Means Committee, said that the argument that the United States uses so-called "forced labor" to justify tariffs is "too far fetched" and is "implementing tariff policies under the guise of questionable legal theories and personal grievances.
Under the newly announced tariff terms, Brazil is facing a 12.5% tax rate. The Brazilian government immediately stated that the US actions were "arbitrary and unreasonable".
Bernd Lang, Chairman of the International Trade Committee of the European Parliament, previously publicly criticized that it is "absurd" for the US to accuse the EU of failing to crack down on "forced labor". This approach is "to first decide on taxation and then find appropriate legal basis". After multiple setbacks, the US government is desperately seeking new legal basis to maintain its tariff policy.
Analysts say that the new rhetoric of the United States imposing excessive tariffs will only increase compliance costs for businesses and exacerbate global supply chain chaos. This move reflects a clear trend: the legal basis can change, but the US's indiscriminate imposition of tariffs remains unchanged.
Many voices oppose
When tariff reasons can be constantly changed and trade rules can be modified at any time, the impact is not only on the global trade growth prospects, but also on the international community's confidence in the stability of the multilateral trading system and rules.
Many observers have pointed out that the US government has almost gone through all legal tools in recent years, often resorting to various long forgotten legal provisions or levying taxes under the pretext of "national security". The international community is not only concerned about a new tariff measure, but also about the dangerous tendency of US protectionism to constantly break through borders and unilateralism to continuously erode multilateral trade rules.
The United Nations Conference on Trade and Development released the latest Global Trade Trends on the 22nd, listing trade policy uncertainty, geopolitical tensions, and unilateral restrictive measures as the main risks facing international trade at present. The report specifically mentioned that measures such as tariffs imposed by some countries are weakening the stability of the global trading system.
The Organization for Economic Cooperation and Development has previously warned that the escalation of protectionism will suppress investment, reduce productivity growth, and push up global supply chain costs.
Many trading partners in the United States have continuously expressed concerns about this. The European Commission has repeatedly stated its opposition to any unilateral measures that violate World Trade Organization rules and reserves the right to take countermeasures. Japan, South Korea, and others have also expressed their hope to maintain a rules based international trade system and avoid further escalation of protectionism.
Analysts point out that in the past, the United States relied more on international rules to influence trade, but now it is increasingly inclined to use domestic laws to change international trade rules and extend its own laws and rules to the global trading system. This not only weakens the authority of WTO rules, but also increases the uncertainty of global business operations.
Backfire on oneself
Analysts generally believe that the costs of high tariffs will ultimately be borne by American consumers and businesses.
The Associated Press pointed out that the new tariff system in the United States covers a wide range of product categories and will push up overall trade costs. The US companies that import foreign products will be the ones paying tariffs, and importers usually pass on the costs to consumers by raising the prices of goods, while the American people are already dissatisfied with the high cost of living.
Market insiders in the United States expect that American companies will once again face supply chain adjustment pressure, and importers will have to bear higher costs, which will soon be transmitted to the consumer end.
More than 20 Democratic state attorneys general in the United States recently sent a joint letter to the Office of the United States Trade Representative, opposing the imposition of tariffs under the pretext of so-called "forced labor". They believe that the new tariffs are only a "substitute" for the tariffs that were previously rejected by the Supreme Court. They are not only suspected of being illegal, but also will further increase the prices of American goods, continuing the economic damage caused by the previous tariffs.
Multiple studies by institutions such as the Peterson Institute for International Economics and the Tax Foundation in the United States have pointed out that high tariffs will ultimately be transmitted to consumers through higher commodity prices, while increasing procurement costs for businesses and weakening competitiveness. The past few rounds of tariff measures have pushed up the prices of intermediate goods in the US manufacturing industry.
Some analysts believe that the United States, disregarding domestic and international opposition, continues to prolong the existence of tariffs, which is essentially due to the US government's difficulty in solving deep-seated issues such as manufacturing competitiveness, and can only rely more and more on tariffs. This' never-ending 'tariff is a vicious cycle that will only further drive up inflation, increase the cost of business operations and people's livelihoods, and ultimately backfire on the US economy.