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Trade war looms after U.S.’s tariff announcement


The announcement of President Trump’s recent tariff hikes sparked speculation across the globe. Is a global trade war on the cards? Leon Perera, CEO of Spire Research and Consulting, shared his thoughts in The Business Times – Views from the Top section on 19 March 2018.

President Trump is heading into dangerous waters with the recently announced trade tariff hikes, for which his administration has cited national security as the rationale under US Trade Law and Article XXI of World Trade Organization’s (WTO) treaty.

Voicing concern, Perera highlighted that other nations may use the same pretext to justify retaliatory tariff hikes, placing the tit-for-tat hikes beyond the usual WTO dispute resolution protocols.

Nonetheless, the US economy gains more from relatively open global trade, which is why President Trump’s tariff hikes are not broadly supported by the American establishment and not even by most leaders of the President’s Republican party.

This means an all-out trade war is not likely. However it cannot entirely be ruled out. Singapore businesses need to hedge their risks by establishing subsidiaries within large economic areas such as the European Union (EU) and the North American Free Trade Agreement (NAFTA), to maintain a point of domestic supply in these vast economic regions in case global trade relations deteriorate.

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