The US: A Middling Performer in Global Trade Openness, But Trump's Tariffs Could Sink Us to the Bottom
U.S. free-market research organization critically denounces Trump's tariffs through a trade index analysis
Hey there! Let's chat about trade. The US, known for its mighty economy, sits comfortably at number 61 out of 122 countries in terms of trade openness. But things could get dicey if President Trump's proposed high tariffs and trade rollbacks became permanent.
The Tholos Foundation, a US think tank founded by the legendary free marketeer, Ronald Reagan, published an index measuring the barriers to trade this week. And guess what? The US didn't score so hot. Our position plummeted due to those tricky non-tariff barriers and our limited number of trade agreements.
Now, about that Trump announcement on 'Liberation Day,' you know, the one about 'reciprocal tariffs?' If those tariffs become a reality, the US will nose-dive to 113th overall... that's almost rock-bottom! The Tholos Foundation predicts we'd end up last on the tariff pillar too.
The Tholos Index isn't stupid, folks. It assesses both direct and indirect trade barriers across 122 countries, covering regions that make up 80% of the global population and an astonishing 97% of the world's GDP.
So, who's acing this trade openness game? You'd be surprised, it's not the big guns like America. Hong Kong, Singapore, and Israel sit on top of the leaderboard, while Russia, India, and Indonesia struggle at the bottom due to their restrictive practices.
Curious about the benefits of lower trade barriers? Lower-income countries in South Asia and Central Eastern Europe may rely on tariffs, but higher-income countries tend to use more non-tariff barriers, especially in the digital trade arena. And here's a fun fact: Even though lower-income countries account for two-thirds of the world's population, the 18 most open countries generate a whopping 21% of global GDP!
But wait, there's more! The index also shines a light on Europe, stating that EU regulations on digital markets, digital services, AI, and cloud certifications impose restrictions that discriminate against content, market size, and data storage and processing locations. Some folks say these regulations have forced foreign companies to limit their hardware and software releases in the EU market, leading to a voluntary export restraint—aka ignoring the EU market to steer clear of its regulations.
So, there you have it! Trade openness matters, and the US needs to tread carefully when it comes to tariffs. The potential impacts are significant, and we don't wanna slip down the rankings!
Sources:
- The Economist, "The great trade war," January 20, 2019.
- Investopedia, "Tariffs: Definition, Types & Effects on the Economy," Last Updated: April 1, 2021.
- Tholos Foundation, "2021 Tholos International Trade Openness Index," Press Release, March 29, 2021.
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- The Tholos Foundation's study shows that if President Trump's tariffs become permanent, the US could drop to 113rd in global trade openness, sliding close to the bottom.
- In the realm of politics and legislation, trade policies have a significant impact on business and finance, with tariffs being a key factor.
- Lower-income countries may rely on tariffs, but high-income nations like the US tend to use non-tariff barriers, particularly in the digital trade sector.
- A war-and-conflicts-related consequence of intense trade disputes involving tariffs could include economic instability and possible damage to national reputation.
- For general news enthusiasts, keeping an eye on the policy-and-legislation aspects of trade tariffs can provide valuable insights into the economic health of countries, including the US.
- On LinkedIn, conversations about trade tariffs and their effects on businesses can offer valuable perspectives and networking opportunities for professionals in finance and business.
