Tariff war likely to end in win-win situation for all despite worldwide condemnation - Economist

KUALA LUMPUR: US President Donald Trump's debilitating tariffs that sparked outright rage and condemnation worldwide could ironically end positively for all trading nations in ultimately liberalising global trade, but in an unprecedented manner.

"Within seven days, US President Donald Trump has achieved more than what the World Trade Organisation has achieved in 78 years in freeing trade," Williams Business Consultancy Sdn Bhd founder and director, Dr Geoffrey Williams, said.

This was because 104 of the 168 countries slapped with tariffs early this month, are now in active negotiations for better trading terms including lowering their own tariffs with Washington, Williams said on Bernama TV's "The Nation - Diplomatic Dispatch" programme hosted by Pasha Rahim yesterday.

This, he said, would likely result in America's trading partners reducing not only tariffs, but non-tariff barriers (NTBs) and restrictions prevalent in the world trading system as well, a move that would ultimately liberalise global trade.

This was clearly evident when after Trump announced a 46 per cent tariff on Vietnam, Hanoi quickly moved to announce pre-emptive bilateral trade concessions to the US.

Williams opined negotiations will likely end positively with a win-win situation for everybody, discounting speculation by some quarters the tariff war would extend till 2028.

"It's very important for smaller countries like Malaysia to look at their own national interest, the interest of their immediate trading partners and cut a deal, (and) that's the most important thing."

Malaysia, along with its fellow ASEAN member states, need not get entangled in the crossfire of the tariff war between US and China that arose mainly due to Washington's frustration over its long-term structural trade deficit with Beijing.

The latest news emanating from Washington is Trump expressing optimism that the final tariff rate imposed on China would come down substantially.

As for Malaysia, Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz would lead a negotiating team anytime soon to Washington to discuss the imposition of the 24 per cent tariffs on Malaysia.

Williams said countries would benefit "provided they don't get dragged into the World Bank-International Monetary Fund (IMF) mainstream narrative."

While the World Bank/IMF forecasts downgraded growth across the board both globally and regionally with specific countries hit hard, he said: "Rather than follow the narrative that this is inevitable, it is better to adopt a positive approach that this must be avoided through negotiations with the US to reduce and remove trade barriers."

This means the negative scenarios are not inevitable but are avoidable by taking a cooperative rather than an uncooperative approach, he said.

Nevertheless, he described the trade war initiated by the US as a "belligerent and aggressive" step and countries naturally have to stand up against it.

He acknowledged the intense speculation surrounding the outcome of the 90-day pause on tariffs.

"If economies and governments can set aside their emotion and engage in sober, rational, straightforward discussions on which tariff barriers and NTBs can be removed, we can positively look forward to a future with lower global trade barriers.

"As a consequence, there would be increased free trade arrangements and everyone would be better off," he said.

Williams said the tariffs by the US government were imposed due to its long-term structural imbalances in trade with many countries especially China since the 1970s, resulting in a structural deficit because of restrictive trade practices by others.

"We (US) are going to impose this reciprocal tariff on you, and if you think that it's unfair, pick up the phone or come and visit us and we will negotiate," he said in reference to the US stand.

"That is exactly what has happened and so, it's more than a possibility, it's a probability (that trade will be liberalised) and the most probable outcome is that things will be better," said Williams.

-- BERNAMA

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