1 week Ago By SunStar Cebu
By Peter TranknerTrumps tariffs are toxic: for his own country and for the world. Like a blackmailer, America’s president is using uncertainty as an instrument of power. What he fails to see is that his erratic policies could actually strengthen the very country he actually wants to weaken: China.
During his first term in office he pressured European companies to stop doing business with China. His motto: Anyone who wants to do business with the world’s largest democracy must separate themselves from communists in Beijing, it is either them or us.A good five years later, Trump is pursuing a tariff policy that will no longer decouple China from the rest of the world, but rather his own country.
In an already historic speech last week, he imposed tariffs on everything and anyone.What can be said about the other then that the plans are either crazy or incredibly poorly thought-out. The president acts as if the US economy were still in the 18th or 19th century -- when protective tariffs were necessary to build industries.
But the US has long been the dominant economic power, an exporter of high technology and a leader in many service industries. Its wealth no longer derives from tariff walls, but from a global economic system that it itself has shaped -- in its own interest. Since the “Reciprocal Trade Agreements Act of 1934” the US has been the engine of free trade.
The opening of markets not only led to global growth but also laid the foundation for American prosperity.And now? “Trump burned all that down”, wrote liberal Nobel laureate economist Paul Krugman. The effect of the new tariffs goes far beyond the immediate economic impact in the form of price increases.
“Trump is spreading fear in a world that needs security”.Like a blackmailer, he sees uncertainty as an instrument of power. Not only is it difficult to trade on this basis, it is even more difficult to invest.
Trump is leaving the governments of effected countries perplexed, including allies and friends.Trump’s unpredictability is toxic, for his own country and for the world. “What he overlooks is that his erratic policies could actually strengthen China, the very country he intended to weaken”.
Beijing will take advantage of the US’s protectionist shift to position itself as a reliable trading partner. China will try to close the gaps created by Washington -- economically, diplomatically and strategically. In response, the Chines already announced that they would significantly increasing their tariffs on US imports.
Others will follow suit.Rising tariffs worldwide, and perhaps even trade war, will cause enormous damage to the global economy. There will be difficult years if Trump does not agree to fundamental deals.
Years in which we will all become noticeably poorer. Affected countries must look at how it can conclude trade agreements with other regions that will at least partially compensate for America’s loss. However, the world will keep trading -- with or without America.
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