Customs tariffs: “The world is perceived as a combat arena and no longer as a space for cooperation”

Chris­ti­an Deb­lock. Through­out his­tory, tar­iffs have gradu­ally been lowered until they lost their cent­ral place in trade nego­ti­ations between states. How­ever, each coun­try remains in con­trol of its tar­iffs, as this is a sov­er­eign right. Since the Second World War, with the estab­lish­ment of the GATT (Gen­er­al Agree­ment on Tar­iffs and Trade, signed in 1947) and then the WTO (World Trade Organ­isa­tion, cre­ated in 1995 by the Mar­rakesh Agree­ment), tar­iffs have been greatly reduced and reg­u­lated with the ulti­mate aim of har­mon­ising prac­tices and fully lib­er­al­ising inter­na­tion­al trade.

Today, around 80% of inter­na­tion­al trade is con­duc­ted on the most favoured nation prin­ciple. After a series of nego­ti­ations, the States under­took to respect max­im­um cus­toms duty rates, in oth­er words the “bound tar­iff”, while the “effect­ive tar­iff” cor­res­ponds to the rate applied in prac­tice. Thus, thanks to the bound tar­iffs, inter­na­tion­al trade enjoys great­er pre­dict­ab­il­ity and stability.

Along­side the mul­ti­lat­er­al tar­iff, there is a second cat­egory linked to region­al agree­ments, such as NAFTA/CUSMA, Mer­cos­ur or the European Uni­on. Finally, and more mar­gin­ally, there are pref­er­en­tial agree­ments applied for devel­op­ing coun­tries, without reci­pro­city. To this pan­or­ama, we must add the so-called “applied cor­rec­tion” meas­ures when coun­tries use unfair prac­tices such as dump­ing or subsidisation.

Dur­ing nego­ti­ations, inter­na­tion­al trade rules have been strengthened, as have dis­pute set­tle­ment pro­ced­ures. All this is to avoid abuse and uni­lat­er­al­ism by members.

Although the archi­tec­ture of the rules gov­ern­ing inter­na­tion­al trade is firmly estab­lished, the United States enjoys con­sid­er­able lee­way. Under Sec­tion 301 of the Trade Act of 1974, the Trade Rep­res­ent­at­ive may sus­pend trade con­ces­sions or impose restrict­ive meas­ures if it is demon­strated that the trad­ing part­ner is viol­at­ing its trade com­mit­ments or has dis­crim­in­at­ory trade prac­tices. Denounced by sev­er­al coun­tries, the WTO has nev­er­the­less val­id­ated this mech­an­ism. It is pre­cisely this tool that is now being used against China.

Anoth­er lever is Sec­tion 232 of the Trade Expan­sion Act of 1962, which gives the Pres­id­ent the power to impose tar­iffs or take any oth­er meas­ure if a sub­stan­tial increase in imports is likely to cause or threaten irre­par­able harm to an Amer­ic­an industry or the Amer­ic­an eco­nomy. We should also men­tion the Inter­na­tion­al Emer­gency Eco­nom­ic Powers Act of 1977, which Pres­id­ent Trump invoked on 2^nd April 2025.

Dur­ing his first term in office, Don­ald Trump ini­ti­ated an over­all increase in cus­toms duties. How­ever, the announce­ments fol­lowed one after the oth­er accord­ing to a cer­tain logic: the meas­ures first tar­geted NAFTA – described by the Amer­ic­an Pres­id­ent as “the worst agree­ment ever signed by the United States” – before turn­ing to China, then tar­get­ing the European Union.

Trump’s second term is char­ac­ter­ised by the bru­tal­ity of the meth­ods employed and the accu­mu­la­tion of meas­ures from all angles. No part­ner is spared. On 1^st Feb­ru­ary 2025, three exec­ut­ive order­sprovide for the applic­a­tion of +25% cus­toms duties on Mex­ic­an and Cana­dian imports and +10% on products impor­ted from China. At the same time, Pres­id­ent Trump asked the vari­ous agen­cies involved to draw up an invent­ory of how coun­tries dis­crim­in­ate against the United States in trade mat­ters (tar­iffs, sub­sidies, taxes, reg­u­la­tions, etc.), by 1^st April.

The res­ult was announced on 2^nd April: a gen­er­al tar­iff of 10% and addi­tion­al tar­iffs known as recip­roc­al tar­iffs for almost all coun­tries, with the not­able excep­tion of Canada and Mex­ico. These include the EU (20%), China (34%), Japan (24%), Viet­nam (46%), Cam­bod­ia (49%) and Taiwan (32%). On Wed­nes­day 9^th April 2025, the United States imposed new sur­taxes on products from nearly 60 trad­ing part­ners, with addi­tion­al cus­toms duties ran­ging from 11% to 60%, with the excep­tion of China, whose products were taxed at 104%. How­ever, the situ­ation changed again shortly after­wards, with Don­ald Trump announ­cing the sus­pen­sion of recip­roc­al tar­iffs for 90 days. Trad­ing part­ners are now sub­ject to uni­form cus­toms duties of 10%, with the not­able excep­tion, once again, of China, this time taxed at 125%.

This policy is a com­plete break with the inter­na­tion­al­ist vis­ion that pre­vailed from the pres­id­ency of Frank­lin D. Roosevelt to that of Barack Obama. It is now being replaced by a geo-eco­nom­ic and “com­pet­it­ive­ness” vis­ion of the world. If, ulti­mately, the aim is to refo­cus the glob­al eco­nomy on the United States, this vis­ion already exists; it is the one that China is pur­su­ing, with the aim of dis­lodging the United States from its still hege­mon­ic pos­i­tion. But does Don­ald Trump really have the means to real­ise his ambi­tions? Can he apply the same meth­ods as China without jeop­ard­ising the eco­nom­ic sta­bil­ity of his own country?

Forced to react, the European Uni­on has pre­pared a pack­age of meas­ures to respond to the Amer­ic­an threats. The reac­tions were imme­di­ate, although, in fact, rel­at­ively cau­tious. Meas­ures have there­fore been taken to retali­ate against a selec­tion of Amer­ic­an products. This cau­tious reac­tion can be explained first and fore­most by the desire to avoid escal­a­tion with an extremely power­ful trad­ing part­ner, but also to avoid attack­ing products with a glob­al­ised value chain. It is easi­er to tax oranges than car parts from a vehicle man­u­fac­tured and assembled in dif­fer­ent countries.

But since 2^nd April 2025, Don­ald Trump has shaken up the entire organ­isa­tion of value chains. The real ques­tion is wheth­er or not the European Uni­on will tip over into the geo-eco­nom­ics of com­pet­it­ive­ness. Mario Draghi’s report, presen­ted in Brus­sels in Septem­ber 2024, already soun­ded the alarm about the loss of com­pet­it­ive­ness of European com­pan­ies in the face of Amer­ic­an and Chinese giants. It poin­ted out the dangers loom­ing over the EU and called on Mem­ber States to rethink trade policies. European val­ues are still part of lib­er­al inter­na­tion­al­ism, but in the face of the bru­tal­ity of cur­rent meth­ods, is this the right strategy?

Nat­ur­ally, with the new meas­ures sought by the Trump admin­is­tra­tion, there will inev­it­ably be con­sequences for the glob­al eco­nomy. Trade will be dis­rup­ted, under­min­ing the sta­bil­ity that the busi­ness world needs to func­tion. Price increases and eco­nom­ic shocks are to be expec­ted every­where. Accord­ing to most mod­els, the most fra­gile eco­nom­ies will be the first and hard­est hit.

Europeans should not under­es­tim­ate the impact on their own mar­ket. Admit­tedly, two thirds of its trade is intern­al, but all mem­ber coun­tries have trade sur­pluses with the United States. Con­cerns about the long-term impact mainly centre on Amer­ic­an for­eign dir­ect invest­ment (FDI): 40% of Amer­ic­an FDI is in Europe (in Ire­land, the Neth­er­lands, the United King­dom, etc.). A move­ment to repat­ri­ate cap­it­al to the United States will dam­age many European eco­nom­ies, first and fore­most Ire­land, which is par­tic­u­larly exposed, since half of its GDP depends on Amer­ic­an multinationals.

The logic of rivalry has taken over in inter­na­tion­al affairs, with act­ors now act­ing accord­ing to a com­pet­it­ive and stra­tegic vis­ion. The United States is act­ing in the name of nation­al eco­nom­ic urgency and opt­ing for exag­ger­ated uni­lat­er­al­ism. The world is per­ceived as a com­bat arena and no longer as a space for cooper­a­tion.  The trade war is just anoth­er war among all the exist­ing battlefields.

Interview by Alicia Piveteau