Trade President Trump unilaterally imposed tariffs on much of the world based on a flawed interpretation of merchandise trade deficits, said CEO of JB Securities (Pvt) Ltd. Murtaza Jafferjee.
He said Trump has focused narrowly on the U.S. trade deficit in goods, ignoring the broader and more accurate measure that includes services. In reality, the U.S. deficit in goods and services is significantly smaller than the numbers Trump cites.
Crucially, the U.S. runs a massive surplus in digital services — advertising, cloud computing, software, and financial services — where it remains the global leader. Although the U.S. accounts for only 4.5% of the global population, it contributes 26% of global GDP and a staggering 35% of global household consumption. This is not an accident — America is the richest large economy in the world. U.S. workers enjoy higher wages than their counterparts in any other major developed economy.
Jafferjee said, the U.S. dollar remains the world’s reserve currency. Even the U.S. trade deficit is settled in dollars. This structural advantage means that surplus countries, such as China and Germany, ultimately recycle their earnings back into U.S. financial markets. The U.S. equity market accounts for 70% of global market capitalisation, and its fixed income markets are by far the largest. This symbiotic loop keeps global capital anchored in the U.S., despite the trade deficit.
However, he said the global disruption to trade could will be an opportunity for Sri Lanka if it restrategises trade focusing on doing away with the many protectionist measures such as tariffs and para-tariffs.
Meanwhile, trade experts said less trade with more protective policies will worsen the situation while more trade with a liberalised policy will help ease the pressure and benefit the economy.
“More trade would mean more opportunities to increase export earnings and less trade will suppress opportunities for earning,” said shipping and logistics expert Rohan Masakorala.
Meanwhile US President said that no one is “getting off the hook” after he appeared to dial down the pressure on China slightly by listing tariff exemptions for electronic products for which Beijing is a major exporter to the United States.
In the latest global trade war twist and turn from the Trump administration, the president asserted on Sunday that there was “no Tariff ‘exception’”, as smartphones, laptops and other products remained subject to a 20 percent rate in “a different tariff ‘bucket’.
