Commentary: Border tax will create self-defeating dilemma for Washington

The recent proposal of a controversial border tax on imports by U.S. House Republicans will not only set back global trade rules and hurt the interests of Washington's trading partners, but also cost U.S. consumers and its global influence dearly.

Though there are some good intentions behind the bill, including raising the competitiveness of American products and fostering favorable conditions for the domestic manufacturing industry, it could never meet the goal without paying a much higher price.

The proposed border tax plan immediately shocked the European Union (EU) and other U.S. allies, and may prompt the biggest dispute in the World Trade Organization, as it goes against basic economic principles and established world trade rules.

A radical increase on import tax would put a heavy burden on domestic consumers, retailers and other businesses, as well as overseas trade partners of the United States.

The unilateral disruption of a trade balance could very likely trigger counter measures from other countries, even a chain reaction across the global trade landscape, with the worst case scenario being a trade war that causes losses on all sides.

China, whose biggest trading partner is the EU and which is undergoing economic upgrading to higher-end production and to rely more on domestic consumption, is unlikly to be the hardest hit by the U.S. border tax.

However, as China is the biggest trading partner and the third largest export destination of the United States, the border tax bill will do more harm than good to the United States. In the past eight years, U.S. imports to China have witnessed an increase of 66.4 percent, according to official statistics.

On one hand, American consumers will be forced to tighten their belts on surging import prices without reliable alternative products, and thus further lower their living standards hit hard by the 2008 financial crisis.

On the other hand, the border tax could push Washington's top trade partners to turn from the United States to rely more on each other for favorable free trade arrangements, which would offset any competitive edge of U.S. exporters brought by the tax plan.

Washington could even foresee an undesired decrease of its global influence as a result of weakened trade relations with major countries around the world.

The strong opposition and warning of retaliation from the EU, whose largest trading partner is the United States, is a reminder to the Donald Trump administration that the protectionist tendency could be a friendship killer. Endi