Economic costs of Trump’s assault on the global system

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On March 3, Donald Trump made two very important decisions. One was for Identification of definitions In Canada and Mexico at a rate of 25 percent, as well as on Chinese imports at a rate of 10 percent, in addition to 10 percent last month. A A 25 % tariff It is expected to follow imports from the European Union. Together, these four economies produce 61 percent of the United States’ imports of commodities. The other and most important decision was to suspend American military aid to Ukraine, giving the besieged country what appears to be Hobson’s choice between surrender and defeat. Trump’s friend, Vladimir Putin, must be active: the American president tears the West in front of his happy eyes.

These are just two sets of decisions in the storm that accompanied the second Trump presidency. But for the outside world, it is of great importance. They represent the end of liberal trade relations, which can be predicted and potentially the rules with the most powerful country in the world and also that created the system itself. It also represents the abandonment of the United States of basic alliances and obligations in favor of a closer relationship with a previous enemy. Trump clearly believes that Russia is more important than Europe.

Either way, he is very wrong. like Morris OtefieldThe chief economist in the International Monetary Fund noted that the US deficit of the United States is not due to the fraud by commercial partners, but because of its spending on income: the largest definition of the American trade deficit is its huge federal financial deficit, Currently in about 6 percent of GDP. Republican -controlled Senate Plans to make the 2017 tax cuts for Trump’s permanent It ensures that this deficit will continue at least as long as the markets are available. Given, attempts to close the commercial deficit with tariffs such as an attempt to flattens a balloon full of full filled.

To understand this will require some knowledge of the macroeconomic economy, which Trump completely lacks. But this is not his only foolishness. Trump also says: “Let’s be honest, the European Union has been formed to inhibit the United States. This is the purpose of this. They have done a good job in that.” Moreover, He said about Europe: “They do not take our cars, do not take our agricultural products, do not take anything almost and take everything from them.”

Both complaints are ridiculous. The European Union has been formed to bring prosperous economic relations and political cooperation to a continent destroyed by two terrible wars. The United States has long understood and actively strengthened this reasonable response. But this was, unfortunately, completely different from an error of self -compassion today.

Moreover, as a Danish economist, Plot Rangid Notes in his blog, Trump only looks at bilateral trade in goods, ignoring trade in services and profits from capital and employment. It happens that the income that the United States derives from service exports, at least to the euro area, the return on the capital and the wages of the work that it exported there, compensates for its bilateral deficit in the goods. The bilateral account balance in the eurozone with the United States is close to scratch, not even this. But the bilateral balances in the goods alone are less important even than the comprehensive bilateral balances. Looking at how to earn his money, Trump was running a great deficit in the goods throughout his life. It seems that he barely hurt him a lot of harm. (See Plans.)

For Mexico and Canada, the economic costs of these definitions will be high, because the exports of commodity to the United States were 27 percent and 21 percent of GDP, respectively, in 2023. The exports of goods in the European Union of the United States will only be 2.9 percent of its gross domestic product in 2023. Therefore, the impact of 25 percent of the crackers will not be significant. However, it will remain a work of unjustified economic work, but rather the economist. The European Union will have to take revenge. Relationships will be permanently damaged.

Even the trade war, it is although it is, It diminishes compared to the Volodymyr Zelenskyy ambush in the Oval Office By the American President and Vice President last Friday and the subsequent comment of Ukraine’s military assistance. The goal may be to force Zelenskyy to sign the metal deal. But the biggest problem is that Zelenskyy does not trust Putin, for a good reason, and now has no reasons for confidence in Trump as well. Trump may also want a “peace deal”, but why does Putin agree to one real if Ukraine is to take?

Both men reduce the will of the Ukrainians to be a free people. But if this goal is achieved, Europe will have to take the burden of its defense insurance and its support in Ukraine. Fredrich Mirz, the next German adviser, was right when he said that “his absolute priority is to strengthen Europe as soon as possible so that we can really achieve independence from the United States.” These steps should be taken quickly. One will be to accelerate the transfer of more than 200 billion euros in the Russian reserves that were seized to Ukraine. Another will be a great defensive accumulation now after the American commitment to NATO collapsed.

The European Union Plus includes the United Kingdom combined 3.6 times Russia and GDP, in purchasing power, 4.7 times. The problem, then, is not a deficiency in human or economic resources: if (IF is large), Europe is effective, it is a balance between Russia in the long run. But the difficulty in the medium term, since then Europe is unable to make some decisive military equipmentAnd that depends on it and Ukraine. Does the United States refuse to provide these weapons if the Europeans bought them? Such a refusal of the show will be the moment of the truth.

Trump wins the economic and political war on allies and those who are exalted. But the resulting collapse in the confidence of countries that used to share their values ​​will end up expensive for the United States as well.

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