All eyes today on AKD’s maiden Budget

President Anura Kumara Dissanayake yesterday putting the final touches to the 2025 Budget, along with Treasury Secretary Mahinda Siriwardana 

All eyes today on AKD’s maiden Budget

FT Monday, 17 February 2025 By Nisthar Cassim 

• Deliverable and credible Budget envisaged whilst fixing imbalances in economy
• Decentralisation and poverty alleviation key focus, with emphasis on meritocracy, equal opportunities, level playing field
• Salary hike for public servants and relief for working class would require extra revenue
• Expect “pro-poor Budget” says Prime Minister in Jaffna
• Analysts tip 2025 Budget to unleash opportunities for private sector and local industries
• Given continuity in IMF program, measures to sustain reforms and transformation envisaged
• MSMEs want President to ensure more practical and genuine relief from banking sector in terms of debt relief and restructuring
• Two minor elections could tempt NPP Govt. to be populist via Budget 2025, analysts caution

 

President and Finance Minister Anura Kumara Dissanayake will present his maiden Budget for 2025 today in Parliament, with stakeholders maintaining a mixed view given the country’s overall weak financial status, ‘wait and see’ attitude of businesses, struggles by the SMEs, and relatively slow consumer spending despite improving macroeconomic indicators. The President’s Media Division yesterday released the customary picture of President Dissanayake putting the final touches to the 2025 Budget, along with Treasury Secretary Mahinda Siriwardana. The President will make the presentation on the Budget 2025 today at 10:30 a.m. in Parliament. Analysts expect Dissanayake, given his pragmatism, to present a Budget that they described as “deliverable or doable and credible” as opposed to unrealistic and far too ambitious. The President and Sri Lanka have committed to proceed with the four-year program of the International Monetary Fund (IMF) under the $ 3 billion Extended Fund Facility (EFF), widely seen as critical to sustain the stability achieved post the external debt-standstill announced in April 2022.Given the unprecedented mandate he received nationwide, including the north and east, in the September 2024 Presidential Election, and the super majority in the November 2024 Parliamentary poll, Dissanayake is also expected to present a Budget that will focus on decentralisation and poverty alleviation. Prime Minister Dr. Harini Amarasuriya in Jaffna yesterday said a “pro-poor” Budget will be delivered, with emphasis on the weakest or most vulnerable sections of society, including those in poverty, pensioners, and the differently-abled.

Most analysts also expected the 2025 Budget to unleash opportunities for the private sector, being the country’s engine of socio-economic growth, to ensure fuller recovery from this year onwards. An emphasis on meritocracy, equal opportunities, and a level playing field is also expected. Others believe a greater emphasis on expanding and strengthening local industries can be envisaged in the Budget.

However, the Micro, Small and Medium Entrepreneurs and Enterprises (MSMEs) are expecting the President and the Government to ensure a more practical and genuine relief from the banking sector in terms of debt relief and restructuring. On his own admission, the President during the launch of the ‘Clean Sri Lanka’ program said with the upcoming Budget, the Government aims to steer economic programs towards the eradication of poverty in our nation.

At the ceremony held on 1 January, Dissanayake also assured a new economic policy framework which will address challenges in the economic system.

“Economic reforms are being formulated to ensure that economic benefits reach rural communities, as an economy concentrated in the hands of a small group can never bring stability to society. Such an imbalanced economy fosters instability for the nation and its people. Therefore, achieving economic stability requires extending economic benefits to rural populations. With the upcoming Budget, we aim to steer economic programs toward the eradication of poverty in our nation,” the President stressed.

In the 2025 Budget, he is also expected to further solidify measures towards digital transformation, thereby minimising inefficiency and corruption while enabling citizens to interact seamlessly and effectively with State mechanisms.

A similar stance is expected with regard to the ‘Clean Sri Lanka’ initiative as well. In this regard, the policy statements under the Budget 2025 will be specific measures to curb the trafficking, spread, and use of substances, especially among youth.

The move to increase salaries to public servants and offer relief to the working class via reduced tax on employment would require additional revenue.

The background amidst which the 2025 Budget comes, according to the Central Bank, comprises economic recovery gaining momentum supported by improving business confidence and market sentiments, as well as the robust expansion of private sector credit, reflecting relaxed monetary conditions. The economy in 2024 is estimated to have bounced back to achieve 5% growth as against 2.3% contraction in 2023 and by 7.8% in 2022.

Earnings from merchandised and services exports hit an all-time high of $ 16.17 billion in 2024, with merchandised exports growing 7% to $ 12.7 billion. However, a rebound in imports – up 12% to $ 18.9 billion – saw the merchandise trade deficit widening to $ 6 billion from $ 5 b in 2023. Workers’ remittances grew by 10% to $ 6.5 billion and earnings from tourism jumped by 53% to $ 3.17 billion. Gross Official Reserves rose to $ 6.1 billion from $ 4.4 billion in 2023. Last year also saw the external debt restructuring process, except for a small portion, being completed successfully.

Government revenue in 2024 rose by 22.7% to an all-time high of Rs. 4.14 trillion. Government expenditure remained more or less unchanged at Rs. 4.8 trillion up to November 2024 in comparison to a year earlier, whilst the Budget deficit declined to Rs. 1.2 trillion as against Rs. 2 trillion.

The country is in an unprecedented situation with 2% deflation as of end 2024 and likely to last till 1Q or beyond. Despite CBSL perspective, consumer demand remains subdued with FMCG companies opting to value additions and budget solutions. Most expect consumer spending to uptick from March ahead of Sinhala-Tamil New Year. With two minor elections slated for the rest of the year, the President Dissanayake-led National People’s Power could become populist via the 2025 Budget though independent analysts have cautioned otherwise.🔺

Munich Security Conference 2025

   On Saturday, debates will take place on the state of the international order as well as regional conflicts and crises. The future of the transatlantic partnership will also be a focus of the second day of the conference.

The MSC 2025 comes at a pivotal moment of change: a new US administration takes office in January, a new cycle of European legislature in Brussels and German parliamentary elections follow just one week after the conference.

After an opening by Federal President Frank-Walter Steinmeier on February 14, hundreds of decision-makers and opinion leaders from different regions of the world will discuss the world's security policy challenges under the chairmanship of Christoph Heusgen.

On Friday, the conference’s main program will start with a focus on global security challenges, including global governance, democratic resilience, climate security, and many more topics. On Saturday, debates will take place on the state of the international order as well as regional conflicts and crises. The future of the transatlantic partnership will also be a focus of the second day of the conference. On Sunday, the conference will wrap up with discussions on Europe’s role in the world.

The MSC 2025 will once again serve as a marketplace for ideas and create space for as many relevant and consequential debates as possible. As in previous years, the conference’s program consists of three parts: the main program curated by the MSC, around 200 official side events, and dozens of public outreach events. The day before the conference, the Minister of Finance of the Federal Republic of Germany, Jörg Kukies, will bring together ministers and high representatives from international institutions for the 4th No Money for Terror Ministerial Conference on Counter-Terrorism Financing.

At the end of the third and last conference day, Jens Stoltenberg will succeed Christoph Heusgen as the new Chair of the MSC.🔺

தையிட்டி விகாரை விவகாரத்தை விரைவில் தீர்த்து வைப்போம்- அமைச்சர் இ , சந்திரசேகர்

``விகாரை கட்டப்பட்டுள்ள காணியை மாத்திரம் தருமாறும், விகாரையை சுற்றியுள்ள ஏனைய காணிகளை மக்களிடம் மீள கையளிக்க தயாராக உள்ளதாகவும் விகாராதிபதி தெரிவித்துள்ளார்``. 

கடற்தொழில் அமைச்சர் இ ,  சந்திரசேகர்  

உறக்கத்தில் உள்ள இனவாதத்தை மீண்டும் எழும்ப அனுமதிக்க முடியாது. அதனால் தையிட்டி விகாரை விவகாரத்தை விரைவில் தீர்த்து வைப்போம் என கடற்தொழில் அமைச்சர் இ ,  சந்திரசேகர் தெரிவித்துள்ளார். 

யாழ்ப்பாண மாவட்டத்தில் 2025 ஆம் ஆண்டிற்கான பன்முகப்படுத்தப்பட்ட வரவு செலவு வேலைத்திட்டங்களை நடைமுறைப்படுத்தல் தொடர்பான கலந்துரையாடல் இன்றைய தினம் வெள்ளிக்கிழமை மாவட்ட ஒருங்கிணைப்புக் குழுத் தலைவர், கடற்றொழி்ல் அமைச்சர் இராமலிங்கம் சந்திரசேகர் தலைமையில் நடைபெற்றது. 

அதன் பின்னர் ஊடகங்களுக்கு கருத்து தெரிவிக்கும் போதே அவ்வாறு தெரிவித்தார். 

மேலும் தெரிவிக்கையில், 

தையிட்டி விகாரை விவகாரம் விரைவில் முடிக்கப்பட வேண்டும். இல்லையெனில் எதிர்காலத்தில் பாரிய விளைவுகளை அது ஏற்படுத்தும். 

உறக்கத்தில் உள்ள இனவாதத்தை மீண்டும் எழும்ப விட கூடாது.  அதனால் அடிப்படையில் இவ்வாறான பிரச்சனைகள் உருவாகுவதை அனுமதிக்க முடியாது. 

விகாரை விவாகரத்தில் பாதிக்கப்பட்ட காணி உரிமையாளர்கள் , அப்பிரதேச மக்கள் , மத தலைவர்கள் , சிவில் சமூக பிரதிநிதிகள் உள்ளிட்ட தரப்பினர்களுடன் விரைவில் பேசவுள்ளோம். 

விகாரை கட்டப்பட்டுள்ள காணியை மாத்திரம் தருமாறும், விகாரையை சுற்றியுள்ள ஏனைய காணிகளை மக்களிடம் மீள கையளிக்க தயாராக உள்ளதாகவும் விகாராதிபதி தெரிவித்துள்ளார். 

எனவே விகாரை விவாகரத்தில் யாருக்கும் பாதிப்பில்லாத வகையில் அதனை தீர்க்க விரைந்து நடவடிக்கை எடுப்போம் என தெரிவித்தார். 

White House bars AP reporter from Oval Office because of AP style policy on ‘Gulf of America’

By  DAVID BAUDER, February 12, 2025

NEW YORK (AP) — The White House blocked an Associated Press reporter from an event in the Oval Office on Tuesday after demanding the news agency alter its style on the Gulf of Mexico, which President Donald Trump has ordered renamed the Gulf of America.

The reporter, whom the AP would not identify, tried to enter the White House event as usual Tuesday afternoon and was turned away. Later, a second AP reporter was barred from a late-evening event in the White House’s Diplomatic Reception Room.

The highly unusual ban, which Trump administration officials had threatened earlier Tuesday unless the AP changed the style on the Gulf, could have constitutional free-speech implications.

Julie Pace, AP’s senior vice president and executive editor, called the administration’s move unacceptable.

“It is alarming that the Trump administration would punish AP for its independent journalism,” Pace said in a statement. “Limiting our access to the Oval Office based on the content of AP’s speech not only severely impedes the public’s access to independent news, it plainly violates the First Amendment.”

The Trump administration made no immediate announcements about the moves, and there was no indication any other journalists were affected. Trump has long had an adversarial relationship with the media. On Friday, the administration ejected a second group of news organizations from Pentagon office space.

Before his Jan. 20 inauguration, Trump announced plans to change the Gulf of Mexico’s name to the “Gulf of America” — and signed an executive order to do so as soon as he was in office. Mexico’s president responded sarcastically and others noted that the name change would probably not affect global usage.

Besides the United States, the body of water — named the Gulf of Mexico for more than 400 years — also borders Mexico.

The AP said last month, three days after Trump’s inauguration, that it would continue to refer to the Gulf of Mexico while noting Trump’s decision to rename it as well. As a global news agency that disseminates news around the world, the AP says it must ensure that place names and geography are easily recognizable to all audiences.

AP style is not only used by the agency. The AP Stylebook is relied on by thousands of journalists and other writers globally.

Barring the AP reporter was an affront to the First Amendment of the U.S. Constitution, which bars the government from impeding the freedom of the press, said Tim Richardson, program director of journalism and misinformation for PEN America.

The White House Correspondents Association called the White House move unacceptable and called on the administration to change course.

“The White House cannot dictate how news organizations report the news, nor should it penalize working journalists because it is unhappy with their editors’ decision,” said Eugene Daniels, WHCA’s president.

This week, Google Maps began using “Gulf of America,” saying it had a “longstanding practice” of following the U.S. government’s lead on such matters. The other leading online map provider, Apple Maps, was still using “Gulf of Mexico” earlier Tuesday but by early evening had changed to “Gulf of America” on some browsers, though at least one search produced results for both.

Trump also decreed that the mountain in Alaska known as Mount McKinley and then by its Indigenous name, Denali, be shifted back to commemorating the 25th president. President Barack Obama had ordered it renamed Denali in 2015. AP said last month it will use the official name change to Mount McKinley because the area lies solely in the United States and Trump has the authority to change federal geographical names within the country.🔺

India, US agree to resolve trade and tariff rows after Trump-Modi talks

By Nandita Bose, Trevor Hunnicutt and David Brunnstrom February 14, 2025 

U.S. President Donald Trump and Indian Prime Minister
Narendra Modi shake hands,at the White House in
Washington, D.C.,U.S., February 13, 2025.
REUTERS/Kevin Lamarque

WASHINGTON, Feb 13 (Reuters) - India and the U.S. agreed on Thursday to start talks to clinch an early trade deal and resolve their standoff over tariffs as New Delhi promised to buy more U.S. oil, gas and military equipment and fight illegal immigration.

The series of agreements emerged after talks between U.S. President Donald Trump and Indian Prime Minister Narendra Modi at the White House, just hours after Trump railed against the climate for U.S. businesses in India and unveiled a roadmap for reciprocal tariffs on countries that put duties on U.S. imports.

• Summary

Trump calls India tariffs 'unfair', limits access to U.S.
India, U.S. set for early trade talks
Initial segments of trade deal to be negotiated by fall 2025
India to raise U.S. energy purchases to $25 bln from $15 bln
Two countries agree to aggressively address illegal immigration

"Prime Minister Modi recently announced the reductions to India's unfair, very strong tariffs that limit us access to the Indian market, very strongly," Trump said. "And really it's a big problem I must say."

The deal to resolve trade concerns could be done within the next seven months, said India's Foreign Secretary Vikram Misri.

A joint statement after the meeting said Washington welcomed New Delhi's recent steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.

While both leaders "had their perspectives" on tariffs, "what is more remarkable...is the fact that we have a way forward on this issue," Misri said.

Some of the leaders' agreements are aspirational: India wants to increase by "billions of dollars" its purchases of U.S. defense equipment and may make Washington the "number one supplier" of oil and gas, Trump said at a joint press conference with Modi.

And Delhi wants to double trade with Washington by 2030, Modi said. Long-planned cooperation on nuclear energy, also discussed by the leaders, faces ongoing legal challenges.

"We're also paving the way to ultimately provide India with the F-35 stealth fighters," said Trump.

Misri, the Indian official, later said the F-35 deal was a proposal at this point, with no formal process underway. The White House did not respond to a request for comment on any deal.

WHAT TRUMP WANTS

Although Trump had a warm relationship with Modi in his first term, he again said on Thursday that India's tariffs were "very high" and promised to match them, even after his earlier levies on steel and aluminum hit metal-producing India particularly hard.

"We are being reciprocal with India," Trump said during the press conference. "Whatever India charges, we charge them."

Elon Musk meets Indian Prime Minister Narendra Modi, in Washington, D.C., U.S., February 13, 2025, in this picture obtained from social media.@narendramodi via X/via REUTERS

Modi vowed to protect India's interests.

"One thing that I deeply appreciate, and I learn from President Trump, is that he keeps the national interest supreme," Modi said. "Like him, I also keep the national interest of India at the top of everything else."

The two leaders praised each other and agreed to deepen security cooperation in the Indo-Pacific, a thinly veiled reference to competition with China, as well as to start joint production on technologies like artificial intelligence.

Asked before the meeting about the steps India was taking, one source described it as a "gift" for Trump designed to lower trade tensions. A Trump aide said that the president sees defense and energy sales to India lowering the U.S. trade deficit.

India's energy purchases from the U.S. could go up to $25 billion in the near future from $15 billion last year, India's Misri said, adding that this could contribute to reducing the trade deficit.

Tariffs will continue to dominate the two countries' relationship, said Richard Rossow, head of the India program at the Center for Strategic and International Studies, a think tank.

"It's going to be a boxing match," he said. "India is willing to take a few hits, but there's a limit."

The U.S. has a $45.6 billion trade deficit with India. Overall, the U.S. trade-weighted average tariff rate has been about 2.2%, according to World Trade Organization data, compared with India's 12%.

• ENB-Summary

New Delhi promised to buy more U.S. oil, gas and military equipment and fight illegal immigration.

FIGHT ILLEGAL IMMIGRATION

Trump wants more help from India on unauthorized immigration. India is a major source of immigrants to the United States, including a large number in the tech industry on work visas and others in the U.S. illegally.

The joint statement said the two countries agreed to aggressively address illegal immigration and human trafficking by strengthening law enforcement cooperation.

India may prove critical to Trump's strategy to thwart China, which many in his administration see as the top U.S. rival. India is wary of neighboring China's military buildup and competes for many of the same markets.

Modi also worries that Trump could cut a deal with China that excludes India, according to Mukesh Aghi, president of the U.S.-India Strategic Partnership Forum lobbying group.

India has continued its ties with Russia as it carries out its war with Ukraine. India has remained a major consumer of Russian energy, for instance, while the West has worked to cut its own consumption since the war started.

"The world had this thinking that India somehow is a neutral country in this whole process," said Modi. "But this is not true. India has a side, and that side is of peace."🔺

NATO Membership for Ukraine Not Realistic-US

NATO Membership for Ukraine Not Realistic, Says Hegseth

By Jennifer Duggan February 12, 2025

A peace deal for Ukraine that allows for eventual NATO membership is not a realistic outcome, US Defense Secretary Pete Hegseth said. At a meeting of defense ministers today in Brussels, Hegseth also said that US troops won’t be deployed to Ukraine as any part of security guarantees and that it’s not feasible to return Ukraine to its pre-2014 borders, before Russia’s invasion of Crimea.

“Chasing this illusionary goal will only prolong the war and cause more suffering,” Hegseth said about Ukraine’s NATO ambitions. President Donald Trump has been pressing for an end to the war in Ukraine, saying his administration is putting together a proposal for peace. Trump said today that he spoke with Russian President Vladimir Putin and that the leaders agreed to begin talks on ending the war.

Hegseth also said Europe will need to “step into the arena” and take more responsibility for the continent’s security. But European members of the alliance have been attempting to demonstrate the full scope of their financial support for Ukraine.

NATO Secretary General Mark Rutte touted a 20% increase in defense spending from non-US NATO allies last year, compared to 2023.

NATO Touts European Spending on Ukraine as It Awaits Hegseth

• Rutte says non-US allies gave 60% of Ukraine money in 2024 
• Trump’s Pentagon chief Hegseth makes first visit to Brussels 

By Andrea Palasciano February 12, 2025 

• European NATO members are aiming to demonstrate to the Trump administration the full scope of their financial support for Ukraine as they’re set to meet the new US Defense Secretary, Pete Hegseth.

• 

  Pete Hegseth, left, with German Defence Minister Boris Pistorius,
  ahead of a NATO defence ministers' meeting in Brussels,
  on Feb. 12.

  Photographer: Johanna Geron/AFP/Getty Images
  
  

  With the future of the US’s aid commitment to Kyiv unclear, NATO defense ministers are hoping to learn more about President Donald Trump’s demands on the alliance when they meet in Brussels this week.(12-02-2025)
• Allies are expecting Trump to keep pushing for more European spending and fairer burden sharing, as well as calling for a swift end to the war in Ukraine, but they’re also hoping to hear that the US commitment to the alliance won’t waver, according to several diplomats.
• Hegseth will take part in a meeting of the Ukraine Defense Contact Group on Wednesday and then in a full gathering of the alliance’s defense ministers on Thursday. Their Ukrainian counterpart, Rustem Umerov, is also expected to join.
• NATO Secretary General Mark Rutte touted a 20% increase in defense spending from non-US NATO allies last year, compared to 2023. He told reporters Wednesday that these non-US allies gave more than half of some €50 billion ($51.9 billion) in aid delivered to Ukraine last year.
• During his first presidency, Trump frequently criticized Europe for lackluster defense spending, and those attacks have continued through recent weeks.
• Trump recently said that NATO countries should spend 5% of their gross domestic product on defense, a figure no single ally reaches, not even the US. The alliance is expected to revise its current spending target of 2% in the coming months, which many, but not all members, now meet.
• Internally, NATO planners estimate that between 3.5% and 3.7% of GDP would be needed to satisfy all the military requirements for the alliance’s defense plans, according to people familiar with the matter.
• Separately, foreign ministers from France, Germany, Italy, Poland, Spain, as well as top EU diplomat Kaja Kallas and new defense commissioner Andrius Kubilius, are due to discuss Ukraine in Paris on Wednesday evening.🔺
• Source:Bloomberg

Trump tariffs on aluminum, steel draw strong backlash

Trump tariffs on aluminum, steel draw strong backlash

By GT staff reportersPublished: Feb 12, 2025

US President Donald Trump's decision to impose a 25 percent tariff on all steel and aluminum imports "without exceptions or exemptions" has drawn strong reactions from major US trading partners, with some of its traditional allies vowing firm countermeasures. 

This adds to growing global trade uncertainties as the Trump administration continues to wield the "tariff stick," breaking the fundamental principles of global trade, a Chinese trade expert said on Tuesday, refuting claims that Chinese steel and aluminum are at the heart of the tariffs by pointing out they target all US imports.   

After repeated threats, Trump on Monday US time signed proclamations raising tariff rates on steel and aluminum to 25 percent. A White House official confirmed the measures would take effect on March 4, Reuters reported.

"It's 25 [percent] without exceptions or exemptions. That's all countries, no matter where it comes from, all countries," Trump said, according to Reuters.  

Strong reaction

The move immediately sparked harsh criticism and pledges of countermeasures from major US trading partners. European Commission president Ursula von der Leyen said on Tuesday that the bloc will respond with "firm and proportionate countermeasures," according to a statement released by the European Commission on Tuesday.

"I deeply regret the US decision to impose tariffs on European steel and aluminum exports. Tariffs are taxes - bad for business, worse for consumers. Unjustified tariffs on the EU will not go unanswered - they will trigger firm and proportionate countermeasures. The EU will act to safeguard its economic interests. We will protect our workers, businesses and consumers," she said in the statement.

EU trade commissioner Maroš Šefčovič also spoke about US tariffs in the European Parliament on Tuesday, calling them "economically counterproductive," "bad for businesses, worse for consumers," and "raising costs for [US] businesses and fueling inflation," the Guardian reported.

He said the bloc was "assessing the scope of the measures announced overnight," but "will be responding in a firm and proportionate way with countermeasures."

German Chancellor Olaf Scholz said on Tuesday that "If the US does not give us any other choice, the EU will respond as one. As the largest market in the world, with 450 million citizens, we have the strength to do so. But I hope that we are spared the misguided path of tariffs and countertariffs. In the end, trade wars always cost both sides prosperity," the Guardian reported.

Spanish Prime Minister Pedro Sanchez on Tuesday has assured that he will defend, together with the EU, the interests of Spanish companies and workers in the face of the "trade war" opened by the US government which, in his opinion, will not benefit "anyone," according to a report by europapress.es.

Canada's Prime Minister Justin Trudeau called the tariffs "unacceptable".  

Canadian Innovation Minister François-Philippe Champagne said in a post on X on Tuesday that steel and aluminum tariffs on Canada, the US' closest ally, would be totally unjustified. 

"Canadian steel and aluminum support key industries in the US from defense, shipbuilding, energy to automotive... We will continue to stand up for Canada, support our workers, and defend our industries as we have always done and always will," Champagne said.

Meanwhile, some of the US' major trading partners are trying to find a deal. Australian Prime Minister Anthony Albanese told reporters on Tuesday that he has spoken to President Donald Trump and "presented Australia's case" for an exemption from the 25 percent tariff on aluminum and steel, according to the Xinhua News Agency. 

Indian Prime Minister Narendra Modi is preparing additional tariff cuts ahead of a meeting this week with Trump that could boost American exports to India and avoid a potential trade war, government officials said, Reuters reported on Monday.

"These countries made prompt responses because the US' latest move will have a negative impact on their trade and industries. In addition, this indicates that allies or not, the US government is inclined to leverage tariffs on countries that may have the so-called damage to the country's economy and industry," Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Tuesday.

While the US claims it is protecting its domestic steel and aluminum industries, it is actually shielding outdated and uncompetitive sectors, Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Tuesday.

As a result, the US is blocking products where other countries have a comparative advantage. However, it lacks the conditions at home needed for its steel and aluminum industries to grow, so no amount of protection will make a difference, Gao said.

Even worse, the move, breaking the fundamental principles of global trade, will escalate global trade uncertainty and have a destructive impact on the world's trade order, Zhou warned.

Even as the US tariffs promoted firm responses from many so-called US allies, The New York Times claimed that "China is at the heart of Trump tariffs on steel and aluminum."

In response, Zhou noted that the US move targets all countries, instead of only aiming at China. 

In addition, the scale of China's steel and aluminum exports is relatively limited, Gao noted.

For a long time, the export ratio of Chinese steel has remained at about 5 percent, much lower than that of other steel-producing countries such as Japan and South Korea, an official from China's Ministry of Industry and Information Technology said earlier.

Commenting on the US' steel and aluminum tariffs at a regular press conference on Monday, Guo Jiakun, a spokesperson for the Chinese Foreign Ministry, said that protectionism leads nowhere, and trade and tariff wars have no winners. 

On Tuesday, Chan Kwok-ki, chief secretary for administration of the Hong Kong Special Administrative Region government, criticized the US' tariff measures for not complying with WTO rules on Tuesday, saying that the SAR will file a complaint with the WTO regarding this unreasonable arrangement.

Greater uncertainty

In addition to the steel and aluminum tariffs, Trump said that he would follow Monday's action with announcements about reciprocal tariffs on all countries that impose duties on US goods over the next two days, and said he was also looking at tariffs on cars, semiconductors and pharmaceuticals, according to Reuters.

Zhou noted that the move is just an excuse for the US to reduce its own tariff concession obligations. Under the framework of multilateralism, the US has benefited from tariff concessions for a long time.

More importantly, focusing solely on reciprocity does not necessarily benefit the US' own trade balance, industries or other problems, Gao said, adding that "every country has its own comparative advantages. In the context of international trade, the idea is that I offer what I'm good at, and you offer what you're good at, so we can all benefit."

If the US rigidly insists on absolute reciprocity, it essentially breaks a fundamental principle of international trade, Gao noted.🔺

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