What Donald Trump started in the United States of America since his return to the White House for a second term in office has disrupted the globe as it continues to shake and shatter a significant portion of all organised trade orders. Naturally and consequently, professionals and experts across the globe have continued to search for the commonsense in the non-relenting policy and have continued to wonder about who stands to benefit from the front and back attacks by the day. Would the tariff policy benefit America instantly or sometimes in the nearest future without any substantial damage to the global image of the country? Or would the country have to pay dearly for what appears to many as an irrational and high handed decision taken by Trump to massage his ego, just as much as his decision in the Russian-Ukraine war, the decision to terminate the US. engagement in the UN WHO and several others. Of course, the more Trump is pushed by his desire to see other nations, most especially China buckle and bow to him, the more the economy of his home state continues to tank, and continues its free fall as ranges of consumer goods prices continue to soar.
Yes, developing a country is about making decisions, tough, unpopular but necessary ones, but it appears that what Trump is doing is not making potentially beneficial decisions but making noises unique to his characteristics of drawing attention to himself and exerting himself on others. It appears so much that Trump would have more than anything wished to be a dictator and an authoritarian leader of the order of leaders he envies. The truth is that Trump would always want to be like Putin of Russia, like Xi of China and even the worst of them all, in North Korea.
For the avoidance of doubt, the existence of a global peace is connected to the existence and maintenance of a peaceful, considerate and mutually benefiting trading system that recognises strengths and weaknesses of nations. When this is broken, the tendencies for world peace and orderliness to also collapse is high and evident. The WTO was for this purpose set up unanimously to address this correlation, promote free trades and set rules for global trades, in place of the defunct General Agreement on Tariffs and Trade (GATT). By the agreement of nations, the WTO was equipped with the responsibility to set rules for global trades, including rules on tariffs, subsidies, and intellectual properties.
Right now, Trump’s action is synonymous with protectionism, and has created trade tension that threatens the ability of the WTO to carry out its mandate. There are no known global trade rules right now; the front and back tariffs attacks have thrown sanity to the air and a silent trade war has commenced; and that is capable of causing bigger damage if sanity is not restored as soon as possible.
Tariffs war among nations has not for once in history yielded projected results. This much Trump’s advisers should have told him; or perhaps, have told him but he is either not interested in the outcome for the country, or he has his own expectation as an eventual outcome. We all quite remember the Smoot-Hawley Tariff Act of 1930, which caused global uproars as it raised the US tariffs on imported goods into the country and immediately received equivalent retaliatory responses from other countries, and eventually became a contributing factor, according to economists and political experts, to the Great Depression of the 1930s.
Responding sometimes in 1947, after World War II, with the global intention to favour trade liberalisation, the General Agreement on Tariffs and Trade (GATT) was established. Its main objective was to address the tariff problems, reduce tariffs and promote trade through multilateral negotiations.
Unfortunately, in recent years, we have seen a number of resurgence of protectionist policies across nations, leading to countries imposing tariffs on target imports beyond what is necessary and sensible. We have witnessed the US-China trade war; the US imposing tariffs on some Chinese goods, citing intellectual property theft and unfair trade practice and an immediate retaliation from China as well. We also have witnessed the US-EU trade tension that saw the imposition of tariffs on EU goods, especially, steel and aluminum, under the guise of national security concern, and of course, an immediate retaliation from the EU. We also have seen the USMCA and NAFTA’s renegotiated trade agreements among the US, Canada and Mexico, leading to imposition of new tariffs and quotas on specific goods.
Just like what the world is witnessing now, has the tariffs’ war ever ended well? No. It has always come with significant economic and political consequences cutting across nations. Just like now, trade disruption across global supply chains is bound to take off, leading to shortages of essential goods, and commensurate inflations with obvious consequences on the purchasing power of the people and the economic growth indices of the countries.
With the ongoing madness, we will begin to see huge disruptions in international trades, companies closing shops, moving businesses, and cost skyrocketing, coming with effects on all with more likely impact on the smaller, less developed nations with more dependencies on imported products. African nations however must have to sit back this time around to address their negative positions, each and every time the world dangles in this trajectory. While everyone is a loser, both the country imposing the tariffs and the country being targeted, we, in Africa, often bear the brunt, as we face responses from all of them on both divides. We are unfortunately at a position where we hold no control. Whatever happens among the contending nations is literally passed down to Africa; as long as we continue to rely heavily on imports and exports to the United States and China, as well as other grossly involved nations. With the possible trade diversion efforts that are bound to come, we will struggle to adapt to the new global trade dynamics. We must be ready; the more the global trade is harmed by the ongoing madness by Trump, the more our local economy will cave and get hurt, because we have only built an economy that is never self sustainable.
For whatever reasons adduced to the tariffs impositions, nobody would end up a winner. We will all become losers eventually and our world would once again pay the price for the madness of Trump. Is the mad, anti-world order, imposition of tariffs the only way to protect US industries and jobs and address the nation’s trade deficits and what Trump considered unfair trade practices? Can the US build competitiveness by forcing all other nations on their knees? I don’t think so. There are always better ways. As it is now, the US is bound to see consumer prices go up and cost of businesses on the rise; and according to experts’ calculation, the after tax income of average Americans would drop by a minimum of $1,300 per household and continue to drop if the war does not end soon. Yes, other nations hit will be harder including severe impacts on their systems, regardless of what responses they exert on the US. The Chinese economy, on the other hand, will undoubtedly experience uncertainty in its exports to the US, as its products become less competitive in the US market as a result of the high tariffs. Whichever way, everyone will be a loser.
While the entire world receives measures of hits and pressure from the Trump’s tariffs war, the Americans must explicitly know that the bulk returns to their table. This war apparently would later become an affront with China, a nation that would not succumb to whatever America throws at it, as much as it is in a better position compared to America. America imports from China is approximately a quarter of China imports from America. It is obvious that for every other dollar increase in tariffs paid by China by Chinese businesses to Americans, the Americans businesses would be paying four times to maintain access to Chinese products. At the same time, China’s trade with the US is a negligible fraction of its trade volume and the country can and would easily survive a pause while it negotiates alternative destinations for those goods. Can America do the same? Businesses are already suffering in the US, but pride is holding back Trump from going all the way to repeal his unpopular tariffs policy.
Now that the reality is upon us, and the fact that Trump is not going to back down any sooner, we, African countries, and Nigeria, specifically, must find the best way to respond to protect our trading system as much as our people. What do we have to do? We must devise a way to escape the full scope of Donald Trump’s tariffs. We must consider the possibility of diversifying our trade partners, through exploration of new markets, strengthening trade relationships with other countries as much as possible to reduce dependence on the US and China. We should begin to identify alternative destinations for most of our goods to drop the quantities of our exports to those countries that are obviously at war. It is also very important that we coordinate stronger regional trade agreements and economic communities to boost African regional trade integration, enhance intra-African trade volume and consistency.
Internally, it is about time we woke up to investing more consciously in our national economic development. Nigeria must have to focus on serious economic development strategies that promote industrialisation, infrastructure development, and human capital growth. To immunise ourselves to the effect of the international economic wars, now and at any other time in the future, we must take advantage of both our population and abundant resources. We much consciously work to build a resilient economy and systems that are immune against corruption.
We must also recognise the fact that whether we like it or not, we are not in any position to project retaliatory responses like some other nations; rather, we should hold our anger at the disruptions, and literally engage strategically by building stronger diplomatic relationship across nations, most especially along major trading partners that will enable us negotiate strong and favourable trade terms and mitigate against potential negative impacts on our systems and economy. Finally, there would be opportunities arising where two big elephants are fighting for the clever small animals; we should be on the watch out to take all the advantages we can.
GOD BLESS THE FEDERAL REPUBLIC OF NIGERIA!
