Former Dean of the Research Institute of the Ministry of Commerce: "Reciprocal tariffs" exceed expectations, and normal trade has actually become impossible | Overseas Insights

The "reciprocal tariff" war launched by Trump continues to escalate.

US officials announced that additional tariffs on Chinese products, reaching up to 104%, will be imposed starting from 12:00 a.m. on April 9. Two days ago, Trump stated that if China does not cancel retaliatory tariffs, the US will impose an additional 50% tariff on Chinese products.

In response, the Chinese Ministry of Foreign Affairs quickly replied, "The Chinese people do not seek trouble, but they are not afraid of it either. Pressure, threats, and blackmail are not the right ways to deal with China. China will surely take necessary measures to resolutely safeguard its legitimate rights and interests."

After Trump announced on April 2 that tariffs would be imposed on almost all countries and regions around the world, it not only caused panic and significant turmoil in the global capital market but also seriously disrupted the normal operations of import - export enterprises in various countries. In the United States, Trump's tough policies have also sparked widespread dissatisfaction. According to a report from the US magazine Fortune cited by Huanqiu.com, the US Chamber of Commerce is considering suing the Trump administration to block the new tariffs that will take effect on the 9th.

The "reciprocal tariff" has caused turmoil in the global stock market.

How long will this round of tariff war last? How will the international trade situation develop? Facing this "chaotic situation", do the overseas - oriented enterprises that are deeply affected have good countermeasures? In order to gain an in - depth understanding of Trump's tariff policy this time and its impact on China's foreign trade industry, "Qiantang Going Global" had an exclusive interview with Huo Jianguo, the former director of the Chinese Academy of International Trade and Economic Cooperation and a senior foreign trade expert.

Huo Jianguo has long been engaged in foreign economic and trade management and policy research. He has rich practical work experience and a high level of policy theory. He is an expert enjoying special government allowances from the State Council, a senior consultant for the Belt and Road Urban Economic and Trade Cooperation Forum, and a Doctor of Economics from the Institute of International Economics and Trade at Nankai University.

From 1993 to 2001, Huo Jianguo participated in China's WTO accession negotiations and APEC work on multiple occasions. After China's accession to the WTO, he was responsible for leading the research on countermeasures for 14 industrial sectors under the jurisdiction of the State Economic and Trade Commission, and achieved positive results. Over the years, he has published many articles in major domestic economic journals and has written books such as "China's Foreign Trade and National Competitiveness". He is proficient in the fields of world economy, international trade, foreign economic and trade management, and policy research.

Huo Jianguo believes that the "reciprocal tariff" policy will last at least 3 - 5 months. Affected by this, it is basically a foregone conclusion that the global trade growth rate will slow down this year. Whether Trump will change his mind next mainly depends on the performance of the US economy in the next six months.

He suggested that countries around the world should no longer tolerate Trump's bullying policies and avoid repeating the mistakes of the economic crisis in the 1930s. Instead, they should unite and resolutely resist, only in this way can they truly safeguard their national interests.

The following is the dialogue between "Qiantang Going Global" and Huo Jianguo:

Qiantang Going Global: In a speech at the China Enterprises International Service Center in February this year, you predicted that the US would soon raise tariffs to around 40%. How do you view the "reciprocal tariff" policy announced by Trump in the past week?

Huo Jianguo: The current situation of global trade conflicts is extremely severe. The 54% tariff on China exceeds everyone's expectations, which means that normal trade is actually impossible to carry out. Therefore, our countermeasures are also necessary.

Trump has gone to the extreme. If the whole world can unite and jointly counter his unilateralism and bullying, the US will have to stop, because it cannot fight against all its trading partners at the same time. However, if everyone fails to unite, it will only indulge Trump's madness, which is a destruction of the global economy, international trade, and international rules. Eventually, the US economy will also suffer heavy losses, such as rising inflation, deteriorating economic indicators, and even a possible recession. So now is a very sensitive and crucial period.

The situation of mutual sanctions may last for another 3 - 5 months.

Qiantang Going Global: What do you think is Trump's real purpose in doing this?

Huo Jianguo: Maybe he wants to force us to negotiate. If there is an opportunity to negotiate, we should seize this window period. After all, a trade war will only hurt both sides, and finding a solution acceptable to both sides through negotiation is the most ideal choice and a way to safeguard national interests.

In the short term, the US economy may still withstand the pressure of high tariffs, but problems will emerge over time. Trump himself is also aware of the risks of inflation and economic recession. Currently, the US consumption index is declining, and the stock market is volatile. If inflation rebounds, the contradiction in his economic policies will become more obvious. Some members of Congress have even proposed to take back the president's decision - making power on tariffs.

In addition, Trump also wants to show his "achievements" as the president by imposing taxes on foreign countries and cutting taxes at home, making the US seem more powerful. But the practice of "America First" is essentially a form of bullying, putting the interests of the US above those of other countries and asking others to "pay tribute", which is definitely unacceptable to the world.

However, given Trump's personality of "not admitting defeat until faced with disaster", he will not easily change his decision without huge domestic pressure. I speculate that the current situation of mutual sanctions may last for 3 to 5 months, and then everyone will return to the negotiation table. In short, we should both counter and leave room for negotiation to strive for a win - win result.

Qiantang Going Global: Is it possible that the conflict will escalate within these 3 - 5 months?

Huo Jianguo: It is possible if China and Europe react strongly. Conflicts start with a show of anger and mutual sanctions. If the problem cannot be solved, it may even escalate to military means. In the 1920s, US President Hoover imposed tariffs, which led to a major recession in the US economy. Some people also attribute part of the reason for the outbreak of World War II to this. But I think the biggest lesson from World War II is that European and American countries indulged Hitler's greed. By the time the US and Europe realized the problem and organized forces to fight back, it was already too late.

The world today is facing the same problem - can we recognize the disaster that Trump's actions bring to the world, unite as soon as possible, and have more countries stand up to counter instead of bowing down and "paying tribute". Therefore, China's direct counterattack is completely correct. It not only safeguards the dignity of the Chinese people but also safeguards the global economic and trade interests.

Qiantang Going Global: To what extent will the tariff war make Trump unable to bear it? What economic indicators can be used as a basis for judgment?

Huo Jianguo: The current volatility of the stock market is a short - term factor affected by panic. The most important basis for judgment is the change in the US consumption index, including retail prices and total social retail sales. Because in addition to the capital market, consumption is what supports the development of the US economy. The Federal Reserve pays more attention to inflation and employment, but these will not show up in the short term. A decline in consumption will directly lead to a slowdown in economic growth or even negative growth.

The reason why the current policy of imposing additional tariffs may last for 3 - 5 months is that if the policy does not produce positive results before October this year and instead leads to a slowdown in economic growth, it will directly affect Trump's chances in the mid - term elections next year. So he can hold on for at most half a year. However, if the results are good and the US economy remains prosperous, Trump will become more determined.

The short - term purpose of raising taxes is more to increase fiscal revenue and make up for the gap caused by tax cuts for domestic enterprises.

Qiantang Going Global: Some people think that the purpose of imposing additional tariffs is to relieve the pressure of US debt. What's your view?

Huo Jianguo: The US debt is a more serious problem and can be said to be the biggest contradiction in the US economy. If he wants to resolve the US debt through trade balance, the gap is too large. The short - term purpose of raising taxes is more to increase fiscal revenue and make up for the gap caused by tax cuts for domestic enterprises. The US side expects that after the implementation of reciprocal tariffs, customs revenue will increase from more than 100 billion to more than 500 billion, but it still cannot fill the big hole dug by tax cuts. It is completely "robbing Peter to pay Paul", and the bullying tariff policy is not accepted by the world, and the US itself cannot sustain it.

Qiantang Going Global: Do you think there are so - called indirect beneficiaries in this round of trade conflicts?

Huo Jianguo: From a global perspective, I don't think there are any beneficiaries. Under the threat of tariffs, the expectations of enterprises are not good, and at least they have made necessary adjustments. Adjusting the global market layout takes at least one year, which will definitely lead to negative growth in global trade.

The global economy entered a weak recovery phase this year. The WTO previously predicted that global trade might recover to a 3% growth rate this year. However, judging from the current situation, the price increase caused by the trade war leads to inflation. To solve the inflation problem, adopting macro - tightening measures will inevitably lead to an economic slowdown. It is still difficult to judge how much the global economic growth rate will decline this year, but we estimate that it is very likely to drop to around 2.3%. If emerging countries in Southeast Asia are severely hit, the drag will be even greater.

The tariff policy seems to "harvest the world", but in fact, it is aimed at containing China.

Qiantang Going Global: Some countries have been imposed with higher tariff rates than China. Previously, some enterprises transferred their supply chains to these countries to avoid the trade war, but now they are still not spared.

Huo Jianguo: Indeed, this tariff policy seems to "harvest the world", but actually has hidden motives and is ultimately aimed at containing China.

Previously, China had already been imposed with a 20% basic tariff, and with this additional 34%, it is very high. Looking at the countries with tariff rates exceeding 40%, many of them are key regions for Chinese enterprises' investment and export transfer, indicating that the US has blocked the "loophole" of China's re - export through third - countries. Even if enterprises invest overseas, they still cannot avoid it.

Therefore, enterprises investing overseas need to change their thinking. They cannot invest overseas just to avoid the risk of US tariffs, as they will still encounter new troubles. Instead, they should truly serve the local market, do a good job in localization, which can not only relieve export pressure and avoid intensifying Sino - US contradictions but also achieve market diversification and find new growth points.

Qiantang Going Global: Then how should enterprises that have already built factories in Southeast Asia respond now?

Huo Jianguo: If China and Europe can reach some kind of agreement, such as reducing tariffs and promoting trade, it will be a great opportunity for enterprises. There are also many potential markets in Latin America, Africa, and the Middle East to explore. Therefore, enterprises need to take immediate action, actively explore new markets, and optimize the supply chain to minimize the tariff pressure.

At the same time, the country should also support enterprises in exploring markets and provide necessary support. On the one hand, open up domestic sales channels and increase efforts to encourage consumption. On the other hand, it is also recommended to allocate a part of national debt or issue additional national debt to support foreign trade enterprises through this difficult period.