Countries may impose 19% tariffs on U.S. services to counter persistent trade deficits, according to a recent Economist analysis. The proposal mirrors methods used by Washington to set goods tariffs, potentially exposing leading American firms like cloud providers and financial institutions to retaliatory measures.
Services Surplus in Focus
The U.S. recorded a $295 billion services trade surplus in 2023, driven by exports of cloud computing, logistics networks, and financial instruments. This contrasts sharply with its decades-long goods trade deficit. "The U.S. excels in exporting intangible expertise rather than physical products," the article noted, highlighting a structural shift in global trade dynamics.
Retaliation Risks and Economic Headwinds
Potential countermeasures against U.S. services include antitrust probes, data regulations, and licensing fees. However, experts warn such moves could backfire. Michael Froman, former U.S. Trade Representative, questioned whether the current administration would use tariffs strategically or maintain them indefinitely, stating: "The world is watching Washington's next move."
Global Consequences Loom
The Economist cautioned that escalating trade measures might harm all parties, echoing lessons from recent goods tariff disputes. With 94% of global CEOs expressing concern about trade policy volatility in a recent McKinsey survey, the proposed service tariffs could deepen economic uncertainties across Asian markets and beyond.
