Azra Hoosen | ah@radioislam.co.za
11 February 2025 | 14:30 CAT
3 min read

In a move that could escalate global inflation and ignite a trade war, President Donald Trump’s recent announcement of a 25% tariff on all steel and aluminum imports has raised alarms worldwide. Professor Mario Ruiz Estrada from the University of Kuala Lumpur weighed in on the potential fallout of these tariffs, arguing that while they may be part of a strategy to protect US interests, they come with serious risks for the global economy.

“Actually, this is a worldwide critical conflict, because if you see, we are going to have a global inflation. Definitely, we are going to have global inflation,” Prof Estrada said.

He pointed out that the United States has historically championed globalisation, free trade agreements, and reduced tariffs. However, this recent move is a stark departure from that approach. “Now, every country wants to protect its market, especially the big markets. Even we know we have BRICS. BRICS is Brazil, Russia, India, China, and South Africa. This bloc is trying to not use the American dollar anymore and use the gold standard. This is generating a kind of conflict of interest geopolitically and in trade,” he explained.

Prof Estrada emphasised that tariffs inevitably lead to price increases. “In economics, when we teach, tariff has a high impact on prices. But at the same time, when the price moves up, consumption starts to reduce, and the dangerous part here is that we can have an economic recession. In the long run, we can have an economic depression,” he warned.

One of the most immediate impacts of the tariffs could be seen in the agricultural sector, particularly in the U.S.-China trade relationship. “The agriculture sector of China depends highly on the United States. Now, all the farmers in the United States are very sad, very worried because the problem is if any product comes from the United States’ agriculture sector, it is going to be very expensive,” he said.

He further warned that the economic impact would not be contained within the United States and China but would spread globally. “If this becomes expensive, raw materials and food will become very expensive in China, and then it is going to have an impact on other sectors because inflation is coming to China. It is a critical situation for the world economy,” he stated.

China’s Economic Rise and U.S. Concerns

Prof Estrada also highlighted China’s growing dominance in global trade. “Now, the big issue is that the United States is very worried about this issue because China is growing dramatically—economically, socially, and technologically. This has a high impact on the entire world,” he said.

He noted that there are typically two ways to counteract the rapid growth of another country. “You impose tariff and non-tariff barriers. Tariff barriers are what we have now, a percentage tax on any import, and non-tariff barriers are things like environmental regulations or other restrictions to protect domestic products,” he explained.

However, he expressed skepticism that tariffs would halt China’s rise. He predicts that in ten years’ time, China is going to replace the United States in the trade war.

He cautioned against using tariffs as a geopolitical weapon. “You cannot mix geopolitics and international trade. It looks like you are putting conditions on countries: If you do not do this, we will impose tariffs, and you will be in trouble. But actually, the final consumer is going to have the biggest problem,” he said.

The Global Consequences of Trade War

Prof Estrada noted South Africa’s position as a member of BRICS, stating that while the bloc is large and influential, its financial stability remains a concern. “The problem is that all these five countries are not stable financially. You depend so much on foreign direct investment from Europe and the United States,” he said.

He warned that if the trade war escalates, it could lead to a devastating economic downturn. “If we enter a recession, I promise you, we are going to have an economic depression,” he said.

He emphasised that China is no longer the weaker nation it once was. He pointed out China’s growing technological and industrial prowess, particularly in areas such as electric vehicles and artificial intelligence. “China’s productivity is so huge that the United States is falling behind. Honestly, China’s productivity is higher, and behind exports is productivity. If you have high productivity, your exports become competitive. And this is what we have with China,” he explained.

Professor Estrada urges the United States to focus on increasing productivity rather than relying on tariffs.

LISTEN to the full interview with Ml Sulaimaan Ravat and Professor Mario Ruiz Estrada, here.