The Reciprocal Retaliation Mechanism Is Counting Down, and the WTO System Faces a Collapse Crisis

On Air Force One, which was flying to New Orleans to watch the Super Bowl, US President Trump dropped a bombshell to the accompanying reporters on February 9 local time: He would announce a 25% import tariff on steel and aluminum products from all countries the next day. If this policy is officially implemented, it will completely change the six - year - old tariff exemption system, marking that the global trade rules are facing a new round of systematic shocks. The news caused violent fluctuations in the international commodity market. The price of three - month aluminum on the London Metal Exchange fell by 1.8% immediately, while the share price of U.S. Steel soared by 5.3% in after - hours trading.

According to the joint data of the US government and the American Iron and Steel Institute (AISI), in the first 11 months of 2024, Canada, Brazil, and Mexico accounted for 42% of the total US steel imports. Among them, Canadas highest monthly delivery volume reached 830,000 tons. In the field of aluminum products, Canada monopolizes 79% of the US primary aluminum supply, and Mexico controls the core share of the scrap aluminum and aluminum alloy market. This deep - seated supply chain integration may cause a chain reaction of the new tariff policy. Analysts from Deutsche Bank estimated that the cost of the North American automotive manufacturing industry may increase by 3 - 5 percentage points. Considering the current 25% tariff on pickup trucks in the US market, the profit margins of automakers such as Stellantis and Ford may be squeezed doubly.

Trump specifically emphasized that this policy adjustment will abolish the duty - free quota system established during his first term. The steel and aluminum tariffs implemented in 2018 granted exemption treatment to countries such as Canada and Mexico, and the Biden administration subsequently expanded the exemption to strategic partners such as the EU and Japan. This gradual relaxation policy once reduced the capacity utilization rate of US steel mills from a peak of 79.3% in 2019 to 73.1% in 2023, but the full implementation of the new tariffs may reverse this trend. The American Manufacturing Alliance quickly issued a statement supporting the policy, saying that this is a necessary measure to rebuild the competitiveness of basic industries.

More severely, Trump also previewed that he would introduce a reciprocal tariff mechanism within 48 hours, claiming that from the effective date of the announcement, immediately match the tariff rates imposed by any country. This immediate retaliatory measure breaks the time buffer of the traditional trade dispute settlement mechanism. Alan Wolff, the former Deputy Director - General of the World Trade Organization (WTO), warned that this is equivalent to lighting a torch next to an ammunition depot. According to the latest statistics of the WTO, the current trade - weighted average tariff of the US is 2.2%. If the principle of full reciprocity is implemented, the tariff on Indian trade goods will jump to 12%, and that on Brazil to 6.7%. This may trigger a wave of counter - measures from emerging market countries.

A risk assessment report leaked within the European Commission shows that Brussels is urgently calculating three response plans: including filing a complaint with the WTO, launching targeted counter - measures, or conducting an interest exchange by expanding liquefied natural gas purchases. German Economy Minister Robert Habeck bluntly said at an emergency meeting in Berlin: We must be prepared for European automakers to bear a 25% export tariff.. This concern stems from the structural differences in auto tariffs between the US and the EU - the EUs unified 10% auto import tariff is in sharp contrast to the USs 2.5% passenger car tariff, but the 25% protective tariff on pickups in the US shows the complexity of the policy.

The Asian supply chain also faces the pressure of reconstruction. The Ministry of Industry and Trade of Vietnam revealed that the countrys steel enterprises have launched emergency response plans and plan to divert 30% of their exports to the US to the ASEAN Free Trade Area. The Ministry of Trade, Industry and Energy of South Korea urgently summoned companies such as POSCO and Hyundai Steel to discuss countermeasures, considering using the regional value content clause in the US - Mexico - Canada Agreement to avoid. This adjustment of the industrial chain may accelerate the differentiation of global trade sectors. A research report by Morgan Stanley predicts that the new tariff system may reduce the growth rate of global trade volume in 2024 by 0.8 percentage points.

The market volatility index continues to rise. The open interest of the S&P 500 Volatility Index (VIX) futures contracts on the Chicago Mercantile Exchange reached an 18 - month high. Eric Robertson, the head of global macro strategy at Standard Chartered Bank, pointed out: When trade policy risks are superimposed with geopolitical uncertainties, the pricing mechanism of the capital market will bear unprecedented pressure.. This concern is confirmed in the bond market. The yield of the 10 - year US Treasury bond fell by 7 basis points in a single day, reflecting investors pessimistic expectations for the economic growth prospects.