In recent days, global markets have spiraled into turmoil, shaken profoundly by the United States’ abrupt imposition of sweeping “reciprocal” tariffs. The policy, aggressively championed by US President Donald Trump as “medicine” for America’s trade deficits, is proving to be far from therapeutic. Instead, it threatens to destabilize the global economy, undermining decades of multilateral cooperation and aligned growth.
Trump’s administration began collecting the new 10 percent baseline tariff on nearly all imports into the US on Saturday, with even steeper duties ranging from 11 to 50 percent coming into effect this week. These measures target allies and rivals alike, including Europe, Japan, South Korea, and notably China, which faces a punitive 34 percent tariff plus a new 50 percent levy on its exports to the US. Such a drastic shift in Washington’s global trade policy not only defies international norms but also violates fundamental principles upheld by the World Trade Organization.
The immediate reaction from global financial markets has been severe. Investors, panicked by the prospect of a protracted and escalating trade war as well as a global recession, triggered a massive sell-off across nearly all major stock exchanges. Hong Kong’s Hang Seng Index plunged more than 13 percent in a single trading session, alongside Taiwan’s TAIEX index. Japan’s Nikkei 225 was not far behind, shedding nearly 9 percent, while South Korea’s KOSPI and Australia’s ASX 200 suffered steep declines exceeding 5 percent. Even the US has not been immune to the turmoil it initiated, with futures for both the S&P 500 and the Nasdaq-100 tumbling, foreshadowing further losses to come.
Trump’s insistence that these tariffs are necessary to rectify the US’ trade imbalances reflects a troubling misunderstanding of global economic interdependence. Trade deficits, contrary to the president’s rhetoric, are not inherently indicative of economic weakness. Rather, they often reveal robust consumer demand, efficient allocation of global resources, and beneficial international specialization. To frame a deficit as a “loss” is simplistic at best, dangerously misleading at worst.
The reality is that these new tariffs will impose tangible harm upon American businesses and consumers. Costs of imported goods — ranging from electronics and automobiles to everyday household items — will inevitably rise, pushing inflation higher and straining household budgets. Further, retaliatory measures from major trading partners are already underway. China, for example, has swiftly responded by announcing reciprocal tariffs and imposing export controls on critical minerals vital to US industries. The European Union has likewise prepared a comprehensive list of American products to target. This retaliatory spiral risks slowing global trade flows, disrupting supply chains, and ultimately hurting workers around the world, including ordinary Americans.
Beyond immediate economic damage, perhaps the most troubling aspect of this tariff policy is its erosion of the rules-based international trading system. For decades, the US was a principal architect of global trade norms, advocating market openness, and championing multilateral institutions such as the WTO. Trump’s unilateral approach, by contrast, bypasses diplomatic negotiation and international institutions altogether, undercutting trust among allies and partners and weakening the very foundations upon which global economic stability rests.
Analysts are increasingly convinced that Trump’s ambitious tariff strategy could tip the US — and by extension, the global economy — into recession. JPMorgan analysts now estimate a 60 percent likelihood of a global recession in 2025, while S&P Global similarly warns of growing recession risks. Former US Treasury secretary Lawrence Summers has described Trump’s tariffs as potentially the most damaging economic policy enacted by the US since World War II. Such dire warnings underscore the profound economic risks that accompany protectionist policies enacted without consideration of global consequences.
Despite these stark warnings and the clear market signals, Trump remains defiant, asserting repeatedly that other countries are “dying to make a deal”. This simplistic view ignores the complexity of international trade relationships, reducing nuanced negotiations to zero-sum contests. Trade, historically, is not about winners and losers; it is about mutual benefit, shared prosperity, and economic cooperation.
In the face of increasing US isolationism, it is imperative for economies worldwide, especially in Asia, to seek collaborative solutions and strengthen economic integration. The Association of Southeast Asian Nations, as well as countries in the Middle East and the broader Global South, present viable alternatives and promising prospects for trade diversification. Indeed, recent data confirms the rising importance of these markets, highlighting the declining share of US-bound exports and the growing economic interdependence within Asia itself.
In Hong Kong, we must remain resilient by actively diversifying our markets, deepening trade and investment ties with ASEAN and the Chinese mainland, and cultivating innovative industries that promise sustainable growth. We must stay vigilant, prepared to respond to potential economic shocks, and committed to open markets and international cooperation. These principles, rather than protectionism and economic isolation, represent the true path to prosperity and stability.
The US’ tariff gambit, conceived in haste and enacted in disregard of international norms, threatens to reverse decades of economic progress. The US must reconsider this misguided approach, return to multilateral dialogue, and reaffirm its commitment to cooperative global economic governance. Economic bullying, cloaked in simplistic rhetoric, is destructive for all involved. It is not too late for Washington to step back from the precipice and choose cooperation over confrontation, openness over isolation, and stability over uncertainty.
The author is the convener at China Retold, a member of the Legislative Council, and a member of the Central Committee of the New People’s Party.
The views do not necessarily reflect those of China Daily.
