U.S. new tariff policy: Playing the reciprocity card to stack the deck

The U.S. unveiled a new tariff policy dubbed "reciprocal tariffs" on April 2 EST (Eastern Standard Time), under which it plans to impose additional ad valorem duties at country-specific rates—starting with "a minimum baseline tariff of 10 percent"—on all imports from all trading partners.

Framed as a response to so-called "unfair trade practices by other countries," this unilateral tariff move is, in essence, a thinly veiled act of unilateral bullying.

The so-called "reciprocal tariff" is neither genuinely reciprocal, nor does it align with standard tariff policy practices. It relies on a simplistic formula that uses the proportion of the trade deficit relative to total imports as the basis for determining tariff rates.

Ignoring the complex realities of global trade, the U.S. has redefined the principle of reciprocity as mere retaliation: if a country imposes a tariff on U.S. goods, Washington responds with an equal tariff—regardless of the context or legality.

In fact, true reciprocity entails not only equality, but also mutual benefit.

Such a policy clearly breaches international trade norms. Under World Trade Organization (WTO) rules, developing economies are entitled to "special and differential treatment" (SDT), which includes maintaining higher tariffs to support nascent industries.

Furthermore, according to the General Agreement on Tariffs and Trade (GATT), which is part of the WTO framework, commitments to reduce tariffs through multilateral negotiations are legally binding, and no member country may unilaterally raise tariffs without consensus.

By arbitrarily redefining its tariff commitments and imposing duties based on a unilateral formula, the U.S. not only violates the Most-Favored-Nation (MFN) principle but also disregards the multilateral rules.

The sustained trade tensions triggered by the policy could worsen economic conditions for both developing nations and the U.S. itself.

By imposing "reciprocal tariffs" indiscriminately, the U.S. risks reigniting trade wars and fracturing the global supply chain built on comparative advantage, consequently slowing global trade and potentially causing widespread economic contraction.

According to the latest Economic Outlook released by the Organization for Economic Cooperation and Development (OECD), uncertainty surrounding U.S. tariff policy has already weighed on the global economy.

The organization revised down its global GDP growth forecast for 2025 and 2026 by 0.2 and 0.3 percentage points, respectively, bringing the projections down to 3.1 percent for 2025 and 3.0 percent for 2026.

Ironically, while "reciprocal" typically denotes fairness and mutual benefit, it also carries secondary meanings such as "inverse" or "retaliatory".

Recognizing the so-called "reciprocal tariff" as just another protectionist tool serving U.S. hegemony, some Chinese experts have satirically dubbed the policy "Lan Shi Pu Ke" (a homophone of "reciprocal" in Chinese), suggesting an indiscriminate and unilateral abuse of tariff policy.

The U.S. has in fact experienced a bitter historical irony regarding additional tariffs. In 1930, the country passed the Smoot-Hawley Tariff Act in an attempt to shield domestic industries through higher tariffs. The result was a worldwide trade war that intensified the Great Depression.

The echo of history still rings, yet similar protectionist instincts appear to be making a comeback. The U.S. should abandon this misguided tariff approach and instead work with its trading partners through dialogue and negotiation to properly resolve differences, which is the only right path forward.