Wide impact of trade and aid policies

In an uncertain world, it is time for us to innovate solutions among ourselves to address the problems related to Trump’s foreign policies

“THE dumbest trade war in history” and similar statements have dominated headlines in the last few days after US President Donald Trump announced that he would be implementing 25% additional tariffs on imports from Mexico and Canada (excepting energy resources, at a lower 10% tariff) and a 10% additional tariff on imports from China.

This was after declaring that “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency”.

Although a constant feature of the presidential campaign, many economists were still flabbergasted that it would happen so soon, and so forcefully.

In the days since, the proposed tariffs with Canada and Mexico have been delayed, with Prime Minister Justin Trudeau and President Claudia Sheinbaum, respectively, having had conversations with Trump, and making public statements about border security and drugs.

Canadian politics has already been particularly energetic given Trudeau’s announcement of his resignation and a general election legally required by October this year.

In the meantime, China has issued retaliatory tariffs and also filed a complaint with the World Trade Organization.

At the same time, the shares of leading technology company Nvidia, especially noted for their development of the graphics processing unit and artificial intelligence computing, tumbled following the release of DeepSeek R1, a free AI-operated chatbot that can answer questions, solve logic problems and write computer programmes, directly rivalling ChatGPT and other similar chatbots.

Like so many millions of people, I have also checked it out and found the results to be impressive, depending on the prompts given. The distinguishing feature is at the back; its efficiency being able to deliver the same quality results with vastly fewer resources, something Chinese firms had previously been unable to do.

This may represent a “Sputnik moment”, referring to the Soviet Union’s launch of the first Earth-orbiting satellite Sputnik 1 in 1957, which caught the US by surprise and sparked the Space Race during the Cold War.

A new race to achieve game-changing AI would certainly affect more than just tariffs.

On these, several explainer videos have emerged detailing the increased costs to US businesses of importing goods, and their eventual passing of these costs to consumers, including of everyday essentials and food items.

Perusing social media accounts from the US (including TikTok, after Trump delayed its ban through another executive order), it’s clear that some Trump voters did not quite understand the impact of tariffs on their own livelihoods. Comments were thin on sympathy: “YOU LITERALLY VOTED FOR THIS!”

Some political pundits have argued that the apparent brinkmanship followed by reversals represent a classic tactic by Trump, propose something outrageous to bring certain things to the table, and then soften the policy. And it seems to be working.

Yet, Trump’s announcement on Feb 4 that the US would “take over” the Gaza Strip and have Palestinians removed from the territory represented a whole new level of craziness.

This not only reverses decades of US policy but also turns traditional diplomacy on its head, more so than Trump’s previous pronouncements to take back the Panama Canal and take over Greenland, currently an autonomous part of the Kingdom of Denmark.

There was immediate bewilderment and criticism, including from European democracies who reiterated that the Palestinians must be able to live and rebuild in their own land.

Some civil society friends did not agree with my suggestion that there could be “better humanitarian outcomes” in the next few years just because the capacity of Malaysian civil society organisations have grown.

Already, with the freeze on American foreign aid funds, many organisations have been told that they will not be getting more assistance, leading to the imminent cancellation of many programmes, including support for stateless and refugee women and children living in Malaysia.

Yet, some Malaysians have long argued that such foreign aid should not have been here in the first place. Despite a long history of foreign assistance, especially in the early years of our nation, they argue that such resources is a threat to our sovereignty and can undermine our political system.

That argument carries no weight among those trying desperately to help those in need, and thankfully other funders are already stepping up to fill the gap.

Ultimately, though, what is needed is a vast and genuine expansion of local fundraising and philanthropy so that our problems are able to be better addressed by and for the local community. This would address concerns from the angles of both humanitarianism and sovereignty.

Just as for Canadian consumers who were shocked by the extent to which their neighbouring country’s leader is willing to go, it is time for us to innovate solutions among ourselves to improve the lives of those who call Malaysia home.

Tunku Zain Al-‘Abidin is founding president of IDEAS. The views expressed here are the writer’s own.