The economic costs of Trump’s assault on the global order
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On March 3, Donald Trump made two very significant decision. One impose tariffs At a 25 percent exchange rate on Canada and Mexico, as well as in the case of Chinese imports, at 10% above the last month. Eght 25% tariff Imports from the EU are expected to follow. Together, these four farms produce 61 percent of the US import. The other and more significant decision was to stop US military assistance to Ukraine, giving it that the complex country, which seems to be the choice of Hobson and the defeat. Trump’s friend Vladimir Putin should be exotic. The US President tears the West in front of his happy eyes.
These are just two decisions in the whirlwind that accompany the second presidency of the trump card. But for the outside world, they are of great importance. They represent the completion of liberal, predictable and rules managed by the world’s most powerful country and the system that created the system. They also represent the abandonment of the main alliance of the United States and the commitment to more close relations with the enemy of supporters. Trump clearly thinks that Russia is more important than Europe.
In both cases he hurts. As Mauress’ consolidationThe former IMF chief economist noted that the US trade deficits are not related to cheating by commercial partners, but excess of income costs. Is the largest determinant of America’s trading deficit, Currently by 6 percent of GDPA number of republican controlled Senate Plan Trump’s 2017 tax cuts permanent It guarantees that this deficit will maintain at least as long as the markets are funding. Given this, attempts to close the trade deficits of tariffs are similar to smoothing a fully filled balloon.
To understand this, it will require some knowledge of macroeconomics that come at all. But this is not his only stupid. Trump says too“Let’s be honest, the European Union has been formed to screw the United States. It’s the purpose of that. And they did a good job. ” Moreover, He said about Europe“They don’t take our cars, they don’t take our farm products, they take almost nothing, and we take everything from them.”
Both complaints are stupid. The EU has developed prosperous economic relations and political cooperation in the continent destroyed by two terrible wars. The United States has long understood and actively contributed to this reasonable response. But it was, alas, very different from us, from today’s self-assured feed block.
More as a Danish economist, Jesper rangvid Notes in his blog, Trump is only in bilateral trade in goods, ignoring the goods and earnings from the capital and workforce. This happens that the US income is at least the eurozone’s exports and returns of capital and its export salary return. The balance of the common eurozone bilateral bilateral current account is close to zero, not even these issues. But the bilateral remains of single products are less significant than the total bilateral remnants. Taking into account how he earns his money, Trump is driving a great deficiency throughout his life. It is unlikely that he caused him to harm. (See charts).
The economic expenses of these tariffs for Mexico and Canada will be great, as US goods exports to 27% and 21 percent of GDP. However, this will be an unjustical action, a really economically illiterate, an economic war. The EU would have to take revenge. Transatlantic relations will always be damaged.
Even the commercial war, the hectic, although it is, Pales compared to Volodimir Zelopinsky at the Oval office Further suspension of the US President and Vice President and the further suspension of military aid to Ukraine. The goal can force Zelenskyy to sign the transaction of minerals. But the bigger problem is that zelenskyy distutts putin, for good reason, and now they have no reason to trust Trump. Trump can also want a “peace transaction”, but why Putin would agree to the real if Ukraine is for its manual?
Two men underestimate the will of Ukrainians to be free people. But if that goal is achieved, Europe will have to take care of providing its defense and the burden of accepting Ukraine. Germany’s next Chancellor, Friedrich Merz was right when he said that his “absolute priority would strengthen Europe as soon as possible, we can actually reach independence.” These steps must also be taken quickly. One will be more transferring to accelerate 200 billion euros, who were confiscated to UkraineOne number of people will be a huge defense work when the Armenian commitment to NATO has collapsed.
EU Plus Great Britain has a combined population 3.6 times Russia and GDP, buying 4.7 times larger. The problem is not a lack of human or economic resources. If (Great, if) Europe could work effectively, it could balance Russia in the long run. But the difficulty is medium-term because Europe is unable to make some decisive military equipmenton which it depends on and Ukraine. Does the United States refuse to supply such weapons if Europeans buy them? The supply of such a rejection will be the moment of truth.
Trump is driving an economic and political war on US allies and dependence. But the resulting collapse on countries that previously shared its values will be completed for very expensive USA.
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