T his has been a challenging and frenetic month for global trade. Earlier this month, American President Donald Trump announced import tariffs of 25 per cent on steel and 10 per cent on aluminium in the name of national security, initially on all countries. Then on March 22, Mr Trump called for tariffs on US$60 billion (S$79 billion) worth of Chinese goods, in addition to tighter restrictions on inward investment from China. Beijing promptly responded that it would, if necessary, retaliate.
To some extent, and at least so far, the protectionist threats have been more bark than bite. For example, soon after announcing the metal tariffs, Mr Trump allowed several countries to be exempted - first, Canada and Mexico (with whom the US is renegotiating the North American Free Trade Agreement); and later, Argentina, Australia, Brazil, the European Union and South Korea. Given that collectively these countries account for more than two-thirds of US imports of steel and aluminium, the exemptions significantly dilute the potential impact of the tariffs.