The world is bracing for Donald Trump’s tariffs, and it’s not just a bluff. The president’s tougher stance on trade has left Chinese officials looking uncertain. Meanwhile, the United States benefits from a strong economy and a weaker global market.
Mr. Trump’s policies are often measured by the performance of the US stock market, which has far outstripped most other countries’. However, tighter immigration policies and tariffs may cause inflation to rise. On the other hand, the US has enjoyed strong productivity growth, even as other countries have struggled.
Tariffs will likely lead to a stronger US dollar, making American exports more expensive. But this will also attract investment from abroad, undermining Mr. Trump’s goal of reducing the trade deficit.
China and Europe are facing economic challenges, with China’s economy projected to grow at just 5% this year. The country relies heavily on exports and has become increasingly reliant on imports due to weaker household spending. Europe is in a similar situation, with Germany and France struggling with political instability and floundering economies.
In the past, when Mr. Trump’s tariffs hit China, it pursued trade agreements with other affected countries. However, with their own economies weak, Europe and Japan are unlikely to be strong allies against the US. Instead, they may try to avoid becoming dumping grounds for Chinese exports.
Mr. Trump is likely to continue his measures and add new ones, closing loopholes that have allowed China to evade tariffs. The next administration will also include more trade hawkish individuals, but its economic team will focus on the benefits of trade rather than tariffs.
A new tariff war could be limited by the involvement of other countries, including business leaders who understand the value of trade and conservative economists who prioritize economic stability over protectionism. Additionally, Elon Musk’s influence as a key player in global supply chains may help to strike a deal with China and other trading partners.
To declare victory and back off from tariffs, Mr. Trump will likely need cooperation on issues like illegal immigration and drug trafficking. The feasibility of such an agreement remains uncertain, but it could be the only option for countries facing economic challenges.
Source: https://www.nytimes.com/2024/12/27/opinion/trump-tariffs-china-europe.html