On April 2, the U.S. government officially implemented a reciprocal tariff policy, imposing tariffs on all of its trading partners in an effort to balance its trade deficit and encourage the reshoring of manufacturing. However, this unilateral measure has not only rattled global supply chains but also deepened tensions with its allies and sparked both economic and political crises at home. The U.S. protectionist strategy is now facing unprecedented backlash.
Allies alienated: The Collapse of Trust in the Global Trade System
U.S. tariff policies have hit its cooperative relationships with traditional allies and developing nations first and foremost. This one-size-fits-all approach ignores the differences in economic structures across countries, forcing nations that once relied on trade with the U.S. to accelerate strategic adjustments—either by seeking alternative markets or banding together in countermeasures—which further undermines U.S.’s dominant position in global supply chains. On April 2, Canadian Prime Minister Mark Carney announced that his nation will respond with retaliatory tariffs against the U.S. Besides, on April 7, EU Commissioner Maros Šefčovič, responsible for trade and economic security, stated that the EU is willing to deploy “every tool” to protect itself from the impact of U.S. tariffs, with retaliatory measures set to begin on April 15. The collective rebound from U.S. allies reveals the true nature of its policy: under the guise of “America First,” it essentially enforces American dominance—even if it means sacrificing the long-term interests of its allies.
Domestic Crisis: Dual Blows of Economic Recession and Political Division
The U.S. government asserts that tariffs aim to “protect domestic industries,” yet this policy has faced widespread skepticism from economists. Critics highlight flaws in the administration’s approach, noting that determining tariff rates by simply dividing the trade deficit by import value overlooks the unique role of the U.S. dollar as the global reserve currency and the structural causes of long-term deficits. This shortsighted strategy has directly triggered financial market turmoil: major U.S. stock indices plummeted following the policy’s announcement. Goldman Sachs has raised the probability of a U.S. recession within the next 12 months from 35% to 45%. Meanwhile, domestic political divisions have exacerbated policy conflicts. On April 4, California Governor Gavin Newsom directed state agencies to pursue new strategic relationships with international trade partners, emphasizing that “California is not Washington.” He further stated that Trump’s tariffs “do not represent all Americans.” Additionally, Elon Musk publicly criticized White House trade advisor Peter Navarro on social media, calling him a “moron.”
Future Outlook: De-Dollarization Accelerates Amid Global Economic Shift
Driven by U.S. tariff policies, global stock markets experienced massive turbulence on April 7, with U.S. stocks leading the downturn and markets worldwide plunging, while gold and commodity markets also felt the impact. These dramatic shifts reflect a global pessimism toward U.S. tariff measures and expose strategic missteps in America’s approach. U.S. unilateralism is severely disrupting the global trade order and accelerating the reconfiguration of supply chains. To reduce dependence on the U.S., many countries are increasing local currency settlements and turning to diversified partnerships. For example, French President Macron has urged French companies to suspend investments in the U.S., and Canada and Australia are exploring deeper economic ties with China. This de-dollarization trend is likely to further marginalize the U.S. in the global industrial chain.
The U.S. tariff policy is caught in a double bind: externally, alliances are fracturing at an accelerated pace and the reconfiguration of global supply chains is irreversible; internally, the intertwining shadows of inflation and recession are steadily eroding confidence in policy. As European Central Bank President Lagarde remarked, “there are no winners in a trade war.” Only through multilateral dialogue and cooperation can we prevent the global economy from sliding into even deeper uncertainty.
