Commentary: U.S. should not set back global economy

In the course of global economy, 10 years is not a very long period. Many people must have remembered how anxious and insecure they felt when they exclaimed that “confidence is more important than gold” during the 2008 global financial crisis which put the world economy at stake.

Today, the momentum for global economic recovery may not be as strong as it is expected and confidence is still extremely important like before.

However, as Managing Director of the International Monetary Fund (IMF) Christine Lagarde warned, trade tensions are leading to clouds accumulating on the horizon of the global economy which are “getting darker by the day”, and the “biggest and darkest cloud” over the global economy is the risk of eroded confidence.

What has eroded people’s confidence for a better economic prospect? A casual look at the worrying reports on the U.S.-initiated trade wars against its trading partners will tell.

International trade is an important part of global economic growth. Breaking WTO trade rules by igniting large-scale trade disputes, the U.S. is bound to sabotage international trading order and impede global economic growth.

A report released by World Bank last month pointed out that a broad-based increase in tariffs worldwide would have major adverse consequences for global trade and activity, and the hardest-hit areas in the event of increased protectionism would be emerging markets and developing economies.

Industry authorities have forecasted that if global tariffs go back to the pre-WTO levels, global economy will plunge by 2.5 percent and trading volume by over 60 percent, creating a more negative impact on global economy than the 2008 crisis did.

The trade war also damages global value chain, causes spillover effects on other countries through international trade, and disturbs effective operation of global economy.

The IMF warned in April that the increases of tariff and non-tariff barriers will destroy global value chain, slow down the spread of new technologies, lower global productivity and reduce investment.

The escalation of the trade war further hurts the confidence of global market, leads to fluctuations in the stock and currency markets and causes fears of enterprises in many countries.

Trade war is a double-edged sword and the U.S. will under no circumstances escape from paying the heavy price for its irrational, unilateral and protectionist practices.

China has taken counter measures against the additional tariffs levied by the U.S. to safeguard its core interests and the fundamental interests of its people.

Before China, the European Union imposed retaliatory tariffs on a list of U.S. imports worth 2.8 billion euros ($3.24 billion) starting from June 22 and Canada has imposed retaliatory tariffs on up to $12.6 billion worth of U.S. products effective from July 1.

The U.S. National Taxpayer Union, the U.S. Chamber of Commerce and insightful American people have criticized the trade war as an “employment killer” that reduces the competiveness of the American products and harms the interests of the Americans.

The majority of the American people are wealthy as they live in the largest developed country in the world. Even when the global economy is harmed and their life consequently affected by the trade war, they are still free from worrying about their basic living quality.

But clearly their government has not realized what a trade war could mean to the impoverished people in developing countries. World Trade Organization Director-General Roberto Azevedo said clearly that the trade war is harmful to all, but for the poorest consumers, they could lose up to 63% of their purchasing power.

Judging from the moral perspective and the international trade rules, the U.S. has no right to set back global economy.

The U.S. always talks about its international responsibilities and global public products. In today’s world where globalization sees deep progress, countries’ interests are intertwined. It is an imperative international duty for each country to create a good environment for international cooperation, add to the momentum for global economic recovery and inject faith in people in a broader development prospect.

The trade war is exactly a devastating global public product, despite the excuses Washington has found to defend. The U.S. is the world’s largest economy, and both its large economic size and strong currency have determined that its policies have a major ripple effect on global economy.

These requirements are neither beyond its capabilities nor dispensable. Instead, they are an obligation and imperative responsibility the U.S. must shoulder. The U.S. must act like a big country as it is.

The world is not a barbaric tribe and trade bullying will never be tolerated. The global affairs cannot and will not be decided by only one country.