Ishiba Can't Let Tariffs Threaten the Stability of the Free Trade System 

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United States President Donald Trump is stepping up his deal-making diplomacy, employing tariffs as a weapon. What their impact will be on the free trade system is definitely a matter of concern.  A free trade system is what supports the prosperity of Japan and other countries.

The Trump administration already threatened to impose 25% emergency tariffs on Colombia, when that country initially refused to allow US military aircraft deporting illegal immigrants to land there. Imposition of the tariffs was put off, however, after the two countries agreed on an arrangement for receiving the deportees. 

The largest-ever deportation of illegal immigrants in the US is a top priority among Trump's "America First" pledges. This case marks the first disagreement using the pressure of tariffs to extract concessions from a foreign country.

Broad Swath of Tariffs

Colombia is one of the pro-US countries in South America, a region where China's influence is growing. The Colombian government announced it would refuse to accept deportees unless they were treated with dignity. An angry Trump then threatened to raise emergency tariffs further to 50% and revoke the US visas of Colombian officials.

Thereafter, starting February 1, Trump imposed 25% tariffs on goods imported from Mexico and Canada. At the same time, he also imposed a 10% levy on Canadian energy products and an additional 10% tariff on China.

According to the US President, the three countries have not taken adequate measures to stem the flow of fentanyl, a narcotic painkiller produced in China, across the borders with Mexico and Canada. In addition, he wants them to stop criminals posing as illegal immigrants from crossing the border into the US. 

Tariffs can effect changes in the behavior of autocratic nations like China and Russia. However, they should not be employed indiscriminately against countries that abide by the international rules. Trump has tasted success with Colombia. There is a risk that he will now press for tariffs on allies and like-minded countries that don't follow his "America First" demands.

For example, when threatening to impose tariffs on semiconductors and steel, Trump said: "If you want to stop paying tariffs, you have to build factories in the United States." It is unclear whether he was referring to a uniform tariff on all imports. However, many countries were naturally alarmed as a result of this threat.

Counter to the Goal of a 'Strong America'

On January 20, the very day of his inauguration, Trump issued a presidential order directing the Department of Commerce and other federal agencies to investigate trade imbalances, unfair trade practices, and currency manipulation by other countries. He also ordered them to report by April 1 on measures to remedy these problems. These moves are likely laying the groundwork for imposing tariffs on a country-by-country basis.

In his executive order, Trump defined the purpose of his America First trade policy. He said they would "strengthen America's industrial and technological advantages and protect America's economic and national security."

The US has deployed its military around the world and is locked in great power competition with China. It is burdened with a huge budget deficit. Moreover, it is facing the challenge of expanding employment for its hard-hit working class.

However, won't the tariff policies that President Trump favors instead frustrate the attainment of rebuilding a "strong America?" 

Avoid Fracturing the Alliance System

Under Trump's tariff system, costs would be passed on to US importers and consumers, fueling inflation. Anxiety is already spreading among domestic industries. One example is the motor vehicle industry which relies on parts and raw materials imported from neighboring countries. Trump promised 60% tariffs on China and 20% tariffs on all other countries during the presidential election. If those are imposed, it is estimated that US GDP will fall by 2.7% and global GDP will decline by 0.8%.

Furthermore, using tariffs as a diplomatic weapon to extract increased defense contributions from European countries, Japan, and South Korea, could cause cracks in the alliance network.

That might lead to a tit-for-tat battle between countries that share the rule of law and democratic values. It could also destabilize the global free trade system itself. Wouldn't that end up benefiting autocratic nations such as China, Russia, and Iran? Those countries are already trying to establish a new "order" tailored to their liking.

Protecting Free Trade

Japan cannot remain silent and overlook the imposition of unreasonable tariffs. Trump places immense importance on communication with leaders of other nations. It is up to these leaders to persistently persuade the US President to exercise restraint and seek compromises.

A February 7 visit by Prime Minister Shigeru Ishiba to the United States is now being finalized. We look to the Prime minister to warn Trump to refrain from engaging in the indiscriminate imposition of tariffs. He should also carefully explain the benefits of the proposed deal for Nippon Steel to acquire the major US steelmaker US Steel. Just like with the unilateral imposition of tariffs, former president Joe Biden's order to block the acquisition was a protectionist move.

It is worth recalling the 2018 address delivered by then-Prime Minister Shinzo Abe before the United Nations General Assembly. That was during the first Trump administration. In his speech, Abe declared that as a "child" of the free and open international economic system, Japan has the mission to strengthen free trade.

We continue to bear that heavy responsibility today. 

RELATED:

• China Faces Economic Strain Amid Rising Oppression and Tariffs
• Transactional Trump Diplomacy Can Drive Wedges Among Allies
• Nippon Steel and US Steel: One Last Chance, Mr Trump

Author: Editorial Board, The Sankei Shimbun

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