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If This Is What “America First” Means, Then Prepare for Global Economic Collapse
When Donald Trump started talking about enforcing tariffs and rebuilding trade barriers during his presidential campaign, few believed him. That is starting to change now, and the world fears he will do just that. By rewriting the rules of international commerce, Trump is navigating uncharted waters.
The world economy could grind to a halt and investors will respond with fear. They will trigger a trade war and a massive stock market crash as the world economy will inevitably take a dip on both sides of the Atlantic and the Pacific.
Trump focused on Mexico and China at the time, but now he’s concentrating on Europe. His warnings appear to have fallen on deaf ears. Indeed, most world political and economic leaders may have missed one of the central tenets of Trump’s protectionism.
The U.S. president seems intent on breaking the very organizations and treaties that his predecessors helped set up. Trump is no fan of the free-trade agreements like North American Free Trade Agreement (NAFTA) or the World Trade Organization (WTO). Both—and others like them—promote the abolition of trade duties and tariffs. Trump wants to bring these back, reversing decades of policies. Stock markets and the global economy will experience shock.
The current focus is on Trump signing a law that would impose a 25% duty on imports of steel and 10% on aluminum. Though the initial areas affected appear to be Canada, Mexico, and the European Union, the main target is clearly China—and possibly even Japan. As for Europe, the measures will have more of a “warning” effect. But there’s no telling how far Trump will go.
Trump’s Gamble Against the WTO
The U.S. president is demanding that Europe open itself more to American products, especially American food products like beef. The Europeans have laws banning the use of certain hormones, which make it all but impossible to agree to Trump’s terms. In turn, Trump can play a number of cards, imposing duties on EU-made automobiles, textiles, and foods worth billions of dollars.