KUCHING: United States (US) President, Donald Trump, wants to impose high tariffs on goods and services imported into the US with the expectation that American industrialists doing business in other countries will eventually rush back to the US.
However, according to former Prime Minister, Tun Dr Mahathir Mohamad, in his statement yesterday, it would take a long time for them to do so, and American costs would be high.
“Trump needs to pause tariffs for eight years if he wants all industries to be in America,” opined Dr Mahathir.
He quoted Bloomberg as saying that it would take eight years for Apple to move out of China, and the US would still have to import.
“This is not what Trump wants. He wants all industries to be in America. That would take another eight years. He needs to ‘pause’ for eight years,” Dr Mahathir said.
He added that high tariffs mean high taxes, which will eventually be paid by American importers and consumers.
“They would have to pay more than the pre-tariff prices for a long time. In other words there would be perpetual inflation,” he said.
“Who will pay? Not the exporters. The American importers and consumers will eventually pay. Presumably they will not buy or buy less. That will hurt the exporters.”
Dr Mahathir further elaborated that trade between all other countries are not subject to high tariffs.
“There would be no tariff barriers by these countries. It may be possible to expand trade with them. Still world trade would diminish,” he opined.
He explained further on this by elaborating on Trump’s latest decision to “pause” tariffs on the imports of iPhones from China to the US.
“Why? Almost all American iPhones are made in China. High tariffs mean these phones cannot be sold at pre-tariff prices in America,” Dr Mahathir added.
“China may lose the American market, but so will the American companies, perhaps more.
“In Malaysia we will pay the old prices.
“Even if they (US) succeed, the iPhones would be costly. They cannot compete in the world market.”
In his opinion, it would take time and higher costs for companies to relocate production to the US, and a 90-day pause is not enough.
“It is not only iPhones. Lots of American products are made in China.
“In fact, lots of American products are not made in America, and that includes Malaysia and other developing countries,” he explained further.
Dr Mahathir wondered how many pauses Trump will have to make, and suggested that Trump should study Malaysia that has experiences with tariffs.
