LONDON - Countries may feel compelled to impose reciprocal tariffs of 19 percent on US services to rectify persistent bilateral trade imbalances, The Economist magazine has said.
In an article published on Saturday, the magazine applied the same methodology for services used by Washington to set reciprocal tariffs and reached the above results, warning that such measures have exposed world-leading US firms to retaliation.
It is true that the United States has run a deficit in the trade of physical goods for decades, but the opposite is also true in the domain of services, the article pointed out.
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US services trade surplus reached $295 billion, just shy of a record, it noted, adding that the United States is, in other words, a powerful exporter, excelling at exporting cloud-computing capabilities, delivery networks and financial-hedging instruments, rather than metals or machines, it said.
Governments have lots of ways to impede US services, from antitrust investigations and data rules to licensing fees and extra taxes on foreign firms, which, however, would hurt their own businesses and consumers, much as US President Donald Trump's tariffs on goods will hurt Americans, added the article.
For decades, US trade negotiators have been intent on reducing global barriers to overseas sales of financial know-how, tech prowess, logistical muscle and more, it said.
The question is "whether this administration is ready to use the tariffs as leverage or whether it is determined to maintain them nonetheless," Michael Froman, former US lead trade negotiator and now president of the Council on Foreign Relations, a think-tank, was quoted by the magazine as saying.
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If Trump chooses to maintain his tariff wall around goods, other countries will use their imports of US services to strike back at Trump's tariffs, inflicting pain on the most competitive US global firms, the magazine forecast.
