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[🇺🇸] USA and EU/China/Canada Trade War
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Trump tariffs and the declining American empire
Muhammad Mahmood
Published :
Mar 22, 2025 23:17
Updated :
Mar 22, 2025 23:17

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As US President Donald Trump slams hefty taxes on imports and constantly threatens for more, goading long-time partners and allies into ugly fights, a global trade war is erupting. With a new round of tariffs on steel and aluminium that went into effect last week, the worldwide “reciprocal” tariffs on the horizon next month could potentially deepen the global trade war.

Details of the Fair and Reciprocal Trade Plan that will impact all US trading partners are not yet known, but the US administration has suggested these tariffs will target any rules it considers “unfair”. Reciprocal tariffs aim to create deals with individual countries, drawing them into the US orbit. Universal tariffs, however, would lead to countries banding together.

The ongoing trade tensions between the US and other countries have created economic uncertainty and may cause significant damage to the global economy. The lessons countries around the world draw will help determine just how much the global economy cracks up as Trump’s trade war deepens.

Tariffs have been a central part of Trump’s overall economic vision. He claims tariffs will enhance US manufacturing, safeguard jobs, increase tax revenue, and stimulate domestic economic growth. He also wants to restore America’s trade balance with its trading partners, reducing the gap that exists between the US imports from and exports to other countries. He has not ruled out a recession due to his trade policies. US Commerce Secretary Howard Lutnick also said the tariffs were “worth it” even if they lead to an economic downturn.

Trump is using tariffs for two different purposes. The first type of tariff is designed to advance his “America First” trade policy. These tariffs are fiscal levers— traditional protectionist measures to disadvantage foreign producers and to stimulate local manufacturing. The second type of tariff are bargaining chips, or in some cases, bludgeoning clubs designed to pressure world leaders to bend to Trump’s diktats. Some of the tariffs can straddle both categories. It is not always clear what is protectionism, and what is power playing.

Trade has been cited as a major contributing factor to the relative decline of the US economy in the global context and to various other internal issues, including significant levels of income inequality. The core of Trump’s response to the decline as he sees it, however, remains economic. To deal with the decline Trump has uniquely combined relentless right-wing propaganda against government depicting it as inherently undesirable, harmful and illegitimate with another idea also relentlessly promoted by the left in the US that free trade is bad and must be shut down. Comprehensive protectionism has been a central cause advocated by US trade unions since the 1970s. Now Far-right figures like Trump are equally vocal in advocating for protectionism, often calling tariffs “the most beautiful word.”

Therefore, Trump’s overall trade agenda has a much wider political scope designed to reverse the continuing decline of the American empire which is reflected in the gradual decline of America’s economic and political influence in a world that is increasingly becoming multi-polar, as the United States loses its dominance from its unipolar era. This is also evident in his slogans such as “Make America Great Again (MAGA)” and “America First.” These slogans are implicit recognition of the US’s declining economic and political influence in the world. He is obsessed by the decline of a once great imperial power, and dreams of rebuilding it.

These slogans not only aim to revitalise the American economy but also carry underlying implications. His blending of protectionism and coercion has an echo of “America First” mantra to appeal to the mass base which propelled him to office. As Russin Foreign Minister Sergei Lavrov pointed out in early February this year that a foreign policy based on exceptionalism risked undermining the global order based on sovereign equality.

Lavrov also warned that the US’s “America First” policy has disturbing echoes of Hitler’s “Deutschland uber alles”, that is “Germany above all” which was used by Nazis to assert national superiority over others. He also expressed his concerns that an approach based on “peace through strength” could be the final blow to diplomacy.

Last week US Secretary of State Marco Rubio announced that South African Ambassador to the US, Ebrahim Rasool, was “no longer welcome to our great country” in the wake of a speech delivered by the ambassador virtually to a South African think-tank during which he criticised Trump administration’s policies. He said that the Trump administration was waging a “a supremacist insurgency” against the West’s political establishment and pandering to an illusory “white victimhood” among its base.

He described Trump’s MAGA movement as a “response not simply to a supremacist instinct, but a clear data that shows great demographic shifts in the USA”. He further stated, “I believe there is also an export of the revolution,” citing examples such as Elon Musk’s involvement in UK politics and US Vice President Vance addressing the Alternative for Germany (AfD) to support their election campaign. In fact, in February, Vance travelled to Europe to promote German Neo-Nazi party leader Alice Weidel.

Rubio accused Rasool of being a “race-baiting politician” who harbours animosity towards Americans and President Donald Trump. But the Trump administration’s hostilities are not just against Rasool, but the whole South African government because of its stand on Palestine, false allegations of oppression of white farmers in South Africa whom Trump encouraged to migrate to the US and growing relationships with Iran and Russia.

This anti-South Africa card also plays right into the fears of many white Americans and whites elsewhere as well as depicting South Africa posing a threat to the white Christian civilisation, further strengthening the support of the evangelical Christians in the US for Trump.

Furthermore, a South African diplomat told the press that cards were heavily stacked against Rasool because “A man named Ebrahim, who is a Muslim, with a history of pro-Palestinian politics, is not likely to do well in that job now.” This perspective of the diplomat also reflects the presence of deeply rooted Islamophobia in the US, including within the political establishment.

President Donald Trump warned BRICS countries against replacing the U.S. dollar as a reserve currency, reiterating his earlier threat of 100 per cent tariffs.”There is no chance that BRICS will replace the U.S. dollar in international trade, or anywhere else, and any country that tries should say hello to tariffs, and goodbye to America,” he said.

The bloc was founded as an informal club in 2009 to provide a platform for its members to challenge a world order dominated by the United States and its Western allies. The BRICS alliance counteracts US policies to protect its empire, including its sanctions warfare, with increasing effectiveness. With more than 30 countries showing interest in BRICS, it is steadily becoming a challenge to the traditional world order.

Neither current conditions nor the BRICS discussions appear to pose an immediate challenge to US interests. Though a common currency has been discussed casually, these countries are far from implementing it. Nonetheless, Trump has repeatedly threatened them with a 100 per cent tariff.

Trump’s interactions with America’s allies and neighbours, along with his proposals such as annexing Canada, controlling the Panama Canal, and acquiring Greenland from Denmark, are aimed at appealing to his MAGA base.

The present world order as crafted by the US to safeguard its imperial reach is slowly but surely breaking down. The G20 which is considered as the new foundation for stabilising the current world order failed to issue a joint statement at the conclusion of its 3-day finance ministers’ meeting held in Cape Town, South Africa in late February this year indicating its irrelevance in the newly emerging multi-polar world order.

The US, like past empires, faces crises in multiple fronts which weaken its global influence. The history of every empire, ancient or modern, has always involved a succession of crises — usually mastered in the empire’s earlier years, only to be ever more disastrously mishandled in its era of decline. Trump’s trade wars show mishandling of America’s imperial decline.

The decline occurs as a result of several negative trends that include the US military machine by diverting funds and resources to endless wars, impoverishes the empire at home, unprecedented government and international debt, the decline of the US dollar as a central bank reserve holding. Another is its decline as a means of trade, credits, and investment, inordinate concentration of wealth in the hands of relatively few individuals, dominance of corporate interests and imperial overreach among many other factors.

The US’s “unipolar moment” in history is encountering significant challenges as more powerful competitors emerge in Asia and Europe, indicating a relative shift in global power dynamics. Many believe Donald Trump’s election as President indicates a further decline and threat to American hegemony. Empires often hasten their own decline by overextending their coping mechanisms, thereby disrupting the existing world order. Trump’s tariff wars illustrate over-extension.

Trump’s bombast hides a complex economic and strategic calculus. Trump’s aggressive hyperbole and macho swagger often mask deep insecurities about the imperial decline. It is most unlikely his words will match his deeds. In the end, his policies, like tariffs, aim to strengthen the economy and maintain US hegemony but might instead accelerate further decline of the empire.​
 

US imposes trade restrictions on dozens of entities with eye on China

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US and Chinese flags are seen before an event in Arlington, US. The latest trade blacklist by the US affects 80 entities from some countries, including China. Photo: REUTERS/FILE

The United States added dozens of entities to a trade blacklist Tuesday, its Commerce Department said, in part to disrupt Beijing's artificial intelligence and advanced computing capabilities.

The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the department citing their "activities contrary to US national security and foreign policy."

Those added to the "entity list" are restricted from obtaining US items and technologies without government authorization.

"We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives," said US Commerce Secretary Howard Lutnick.

The entities targeted include 11 based in China and one in Taiwan, accused of engaging in the development of advanced AI, supercomputers and high-performance AI chips for China-based users "with close ties to the country's military-industrial complex."

They include the Beijing Academy of Artificial Intelligence and subsidiaries of IT giant Inspur Group. Others were included for "contributions to unsafeguarded nuclear activities" or ballistic missile programs.

The aim is to prevent US technologies and goods from being misused for activities like high performance computing, hypersonic missiles and military aircraft training, said Under Secretary of Commerce for Industry and Security Jeffrey Kessler.

Two entities in Iran and China were also added to the list for seeking to procure US items for Iran's defense industry and drone programs, the Commerce Department said.

Beijing condemned the blacklisting of its firms, accusing Washington of "weaponizing" trade and technology in a "typical act of hegemonism".

"We urge the US side to stop generalizing the concept of national security... and stop abusing all kinds of sanctions lists to unreasonably suppress Chinese enterprises," foreign ministry spokesman Guo Jiakun said at a daily news conference.

China would take "necessary measures" to defend its firms' rights, Guo added. Several of the blacklisted companies did not respond to AFP's request for comment on Wednesday.​
 

China, Japan, South Korea will jointly respond to US tariffs, Chinese state media says

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South Korea's Trade, Industry and Energy Minister Ahn Duk-geun (C) poses for a photo with Japan's Economy, Trade and Industry Minister Yoji Muto (L) and China's Commerce Minister Wang Wentao (R) during the 13th Trilateral Economic and Trade Ministers' Meeting in Seoul on March 30, 2025. Photo: AFP

China, Japan and South Korea agreed to jointly respond to US tariffs, a social media account affiliated with Chinese state broadcaster CCTV said on Monday, an assertion that Seoul called "somewhat exaggerated."

The state media comments came after the three countries held their first economic dialogue in five years on Sunday, seeking to facilitate regional trade as the Asian export powers brace against US President Donald Trump's tariffs.

Japan and South Korea are seeking to import semiconductor raw materials from China, and China is also interested in purchasing chip products from Japan and South Korea, the account, Yuyuan Tantian, said in a post on Weibo.

All three sides agreed to strengthen supply chain cooperation and engage in more dialogue on export controls, the post said.

When asked about the report, a spokesperson for South Korea's trade ministry said "the suggestion that there was a joint response to US tariffs appears to have been somewhat exaggerated," and referred to the text of the countries' joint statement.

During Sunday's meeting, the countries' trade ministers agreed to speed up talks on a South Korea-Japan-China free trade agreement deal to promote "regional and global trade", according to a statement released after the meeting.

"The three countries exchanged views on the global trade environment, and as you can see in the joint statement, they shared their understanding of the need to continue economic and trade cooperation," the South Korean trade ministry spokesperson said.

Japan's foreign ministry did not immediately respond to a request for comment.

The countries' trade ministers met ahead of Trump's planned announcement on Wednesday of more tariffs in what he calls "liberation day", as he upends Washington's trading partnerships.

Beijing, Seoul and Tokyo are major US trading partners, although they have been at loggerheads amongst themselves over issues including territorial disputes and Japan's release of wastewater from the wrecked Fukushima nuclear power plant.​
 

Weak US economic outlook persists despite brief trade truce with China: Reuters poll

REUTERS
Published :
May 21, 2025 21:52
Updated :
May 21, 2025 21:52

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The One World Trade Center building stands amid the Manhattan skyline in New York City, US, July 26, 2023. Photo : REUTERS/Amr Alfiky/Files

The outlook for the US economy remains weak despite a temporary cooling of the US-China trade war, a Reuters poll of economists showed, with a debate over the country's fiscal health hanging in the balance.

A 90-day truce to temporarily slash steep US-China import duties has marginally reduced US recession risks, but the fiscal outlook is worsening ahead of an imminent vote in Congress on President Donald Trump's sweeping tax-cut bill following a sovereign credit rating downgrade from Moody's on Friday.

Economists in a May 14-21 Reuters poll were unanimous the Trump administration's policies have hurt the economy, with over 55 per cent saying "significantly hurt".

But after big downgrades to their growth and upgrades to inflation forecasts in April, economists kept these broadly unchanged in May.

"Moody's is likely sending a message that the proposed tax bill is fiscally profligate... unless there is an abrupt move, the risk is that by the time Washington gets serious about the US's fiscal problems, tariffs might be the only available lever to meaningfully reduce the deficit," noted Aditya Bhave, a senior US economist at Bank of America.

"Another round of large tariff hikes would probably be more painful for the economy than a less expansionary fiscal package."

The economy, which contracted 0.3 per cent last quarter largely due to a record surge in imports, is forecast to grow 1.5 per cent this quarter. It would grow just 1.4 per cent this year, a sharp slowdown from last year's 2.8 per cent. Next year, it was forecast to expand 1.5 per cent.

The median probability of a US recession over the coming year did, however, decline to 35 per cent from 45 per cent in April.

Economists barely changed their views on inflation, expected to average above the Fed's 2 per cent target until at least 2027, echoing consumer expectations which are already at a multi-decade high.

"The bad news is the detente virtually locks in a slow growth, sticky inflation environment as the base case for the US economy. The effective tariff rate at 13 per cent is still substantially higher than where it was coming into the year (around 2 per cent)... Policy uncertainty is high and recession risks remain elevated," said Michael Gapen, chief US economist at Morgan Stanley.

Fed officials have highlighted elevated risks of a resurgence in inflation, primarily due to US tariff policies and appear to be in no hurry to cut rates anytime soon. The federal funds rate has stayed in a 4.25 per cent-4.50 per cent range since the start of this year.

Just over half of economists, 52 of 103, predicted the Federal Open Market Committee (FOMC) would resume cutting its key interest rate next quarter, most likely in September. That was in line with interest rate futures pricing.

A significant minority, 25, expected the reduction in the final quarter and 18 saw no cuts this year. Only eight forecast a June cut, compared to nearly 40 per cent expecting at least one reduction by end-Q2 in the April survey.​
 

US and China set for trade talks in London on Monday

REUTERS
Published :
Jun 08, 2025 18:58
Updated :
Jun 08, 2025 23:00

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A drone view shows shipping containers from China at the Port of Los Angeles, in San Pedro, California, U.S., May 1, 2025. Photo : REUTERS/Mike Blake

Three of U.S. President Donald Trump’s top aides will meet with their Chinese counterparts in London on Monday for talks aimed at resolving a trade dispute between the world’s two largest economies that has kept global markets on edge.

U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will represent the United States in the talks, Trump announced in a post on his Truth Social platform without providing further details.

China’s foreign ministry said on Saturday that vice premier He Lifeng will be in the United Kingdom between June 8 and June 13, adding that the first meeting of the China-U.S. economic and trade consultation mechanism would be held during this visit.

“The meeting should go very well,” Trump wrote.

Trump spoke to Chinese President Xi Jinping on Thursday in a rare leader-to-leader call amid weeks of brewing trade tensions and a dispute over critical minerals.

Trump and Xi agreed to visit one another and asked their staffs to hold talks in the meantime.

Both countries are under pressure to relieve tensions, with the global economy under pressure over Chinese control over the rare earth mineral exports of which it is the dominant producer and investors more broadly anxious about Trump’s wider effort to impose tariffs on goods from most U.S. trading partners.

China, meanwhile, has seen its own supply of key U.S. imports like chip-design software and nuclear plant parts curtailed.

The countries struck a 90-day deal on May 12 in Geneva to roll back some of the triple-digit, tit-for-tat tariffs they had placed on each other since Trump returned to the presidency in January.

That preliminary deal sparked a global relief rally in stock markets, and U.S. indexes that had been in or near bear market levels have recouped the lion’s share of their losses.

The S&P 500 stock index, which at its lowest point in early April was down nearly 18% after Trump unveiled his sweeping “Liberation Day” tariffs on goods from across the globe, is now only about 2% below its record high from mid-February. The final third of that rally followed the U.S.-China truce struck in Geneva.

Still, that temporary deal did not address broader concerns that strain the bilateral relationship, from the illicit fentanyl trade to the status of democratically governed Taiwan and U.S. complaints about China’s state-dominated, export-driven economic model.

Trump has repeatedly threatened an array of punitive measures on trading partners, only to revoke some of them at the last minute. The on-again, off-again approach has baffled world leaders and spooked business executives.

China sees mineral exports as a source of leverage. Halting those exports could put domestic political pressure on the Republican U.S. president if economic growth sags because companies cannot make mineral-powered products.

In recent years, U.S. officials have identified China as its top geopolitical rival and the only country in the world able to challenge the United States economically and militarily.​
 

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