US Tariffs: A self-inflicted wound with global repercussions

THE United States’ sweeping tariffs and the inevitable retaliatory measures they provoke represent a perilous and miscalculated approach to global trade.

Commenting on the U.S. imposed tariffs, former Bank Negara Malaysia Deputy Governor  Sukudhew (Sukhdave) Singh said rather than engaging in targeted, bilateral negotiations, these broad tariffs are causing widespread economic harm.

The idea of "reciprocity" underlying these tariffs is a fallacy; trade surpluses do not inherently equate to manipulation.

Economic Fallout: A Clear and Present Danger

The repercussions of these tariffs are severe and far-reaching.

Global growth is set to suffer, while inflationary pressures mount and unemployment rises.

It is the middle and lower-income households, particularly in the US, that will bear the brunt of the damage.

This is a textbook example of the "beggar-thy-neighbour" strategy, which seeks to artificially boost domestic production and consumption at the expense of international trading partners, he said in a recent Linked post.

The Burden Will Fall on U.S. Consumers Too

There is a common misconception that exporters shoulder the burden of tariffs.

In reality, the costs are passed directly to US importers and consumers, driving up the prices of everyday goods.

These tariffs are, in essence, a tax on the American public.

While exporters may see diminished demand for their goods in the US due to increased costs, the ripple effects throughout intricate global supply chains will amplify the economic strain, exacerbating stagflation both in the US and worldwide.

Southeast Asia: A Vulnerable Epicentre?

Countries heavily involved in global supply chains, particularly in Southeast Asia, face a grim outlook.

They are likely to experience deteriorating balance of payments, weakening currencies, sluggish growth, and surging inflation as the economic turmoil ripples outward.

The knock-on effects could be felt far and wide, with economies across the region struggling to keep pace with the consequences of the US's trade policies.

A Global Hydra Unleashed

What began as a tariff-driven dispute has now escalated into a full-blown trade war, with far-reaching consequences that threaten to destabilise the global economy.

The potential for catastrophic damage is real, and the fallout could exceed even the most dire current projections.

A Plea for Sanity

There is an urgent need for responsible leadership, particularly from the US, to prevent a global economic crisis. Now is not the time for reckless protectionism but for thoughtful diplomacy and measured decision-making, he said, - April 6, 2025