Powerful voices are out in public against the protectionist policies pursued by US President Donald Trump. This time, criticism of the Trump’s trade war is coming from a South African Economist Mike Haworth, who said that the U.S actions of trade protectionism targeted at China will not only boomerang on the US but also would create distortions in the global economy. According Haworth, a country that imposes the tariffs, the costs go up relatively since the domestic manufacturers can then increase their prices since the imported goods enter the country at a higher mark up adjusted against the tariff rate. That will also help the domestic manufactures to up the prices because of the inadequate supply.
However, the economist believes that this isolated this incident will not impact globalization since it is a permanent fixture in the ongoing milieu and no country or group of countries can go against the tide. It is also a fact that President Trump has relaxed some of the import and export restrictions cast on the American companies and even with the black listed Chinese corporation Huewai, which is allowed to source and export goods to the US in the interest of some of tech giants.
Haworth, who is a Sasfin Wealth investment strategist, also thinks that the U.S is going against the trend of free trade and globalization, which will affect the stability of international market and the trade war initiator US cannot live in a silo. The pangs of protectionism will also chase the US economy and the people. Admittedly, several US corporations and farmers have come out in open against the trade war since it is affecting their bottom lines. Farmers from the Soya growing area are particularly perturbed about losing their huge Chinese markets, so also the exporters of meat, wine, almonds, fresh fruits and vegetables, for whom China is a big market.
The clarion call made by President Trump to the US corporations to wind up their operations in China and to relocate back to the US also did not go well with China based US investors. The high wage rate and higher cost of production in the home country are some of the factors that they point out while dragging their feet for winding up the operations. There is a strong lobby of corporate owners who dub the Trump proposition as one against all established principles of economics that investments should go to places where there is a competitive advantage. It is worth noting that of late, the consumer prices in the US are moving up on account of the low imports caused by higher tariffs imposed on some of the goods like smart phones and other electronic devices.
