Donald Trump Had not acted as president for even two weeks when he ordered a huge import duties for the three largest trading partners in the United States, Canada, Mexico and China.
The regulations were due to enter into force today on Tuesday, but yesterday, both Mexico and Canada, were postponed by month.
Despite the postponement, Trump’s customs threat seems no longer just a game, but a much bigger thing than his first season.
Trump’s aggressive trade policy does not seem to be just negotiation tactics.
He feels like a truly believer in the usefulness of customs policy. It is a central part of his vision to “restore America’s greatness”.
Trump also ordered duties in his first presidential term, but now the scale and speed are much higher.
In the first season, the destination of the customs was mainly China, and the duties that were now assigned were directly targeted at the US central allies.
Trump has also threatened the EU and even talked about the general customs of all products.
Return to the past that never had
Recently, Trump has often struck the late 19th century in the United States.
At that time, the world economy was a time of hard customs and aggressive trade war. However, economic historians have shown that the huge economic growth in the United States at that time did not happen thanks to the customs walls, but that rather than that.
Trump creates a picture of a golden past that never existed.
Trump has also declared his crushing globalists.
Since the Cold War since the 1990s, accelerated economic globalization has raised hundreds of millions of people from absolute poverty and completely changed the world economy.
It has also brought tremendous economic growth to the United States, but economic growth has not been channeled down as wages in the same way as in previous decades.
Trump’s political success has been largely based on the fact that he was able to say the pain that, especially the less educated people in the United States, experienced jobs to move to China.
Although the standard of living of most Americans rose, it didn’t seem like many.
Globalization, formerly opposed to the left, became the target of right -wing populists.
Customs wall logic is a private thinking that receives no support from economists
The problem is that Trump’s idea of customs walls cannot turn the wheel back and the effects of customs can be actually harmful to the president’s own supporters.
Trump claims that duties improve US trade balance, strengthen the US industry and bring a huge amount of income to the federal state.
All of these claims are false to most economic wisdom.
It is true that the United States brings much more from China or Europe, for example than it takes there. But the United States has been brought From the 1970s until the country has taken more than the earth. Still, the US economy is still doing quite well at the moment.
Customs and trade war would only strengthen the dollar that would further reduce the purchase of American products elsewhere.
At the same time, the prices of import products in the US would increase and inflation is likely to accelerate.
Confusion of production chains can also mess up the US economy
Trump and many of his supporters have a vision that duties forcing production back to the United States.
But during globalization, different production chains have become very complex.
– 25 % duty for Canada and Mexico threatens to turn the just the production chains that have made the US industrial production competitively in the world, and Jay SimmonsLeader of the US National Industrial Production Organization said the decision.
American consumers are hardly ready to pay many times more prices for their TVs, cell phones or toys, just because they are Made in USA.
And every major company in the world market now has to think about its investment in the United States, even through the so -called risk.
When US trade policy can be thrown so hard in one day, billions of investments in the country may not be made.
Duties do not resolve US federal indebtedness
Trump seems to genuinely believe that huge duties are the solution to the continuous growth of the US federal debt.
According to most economists, the idea is simply delusional. First of all, even the new large duties now planned are only a fraction of the US expenditure.
Secondly, Trump, and especially his supporters, seem to think that duties are something that foreigners pay.
However, indicatethat most of Trump’s first season’s first season ended up at prices in the United States.
Even some of Trump’s own party, Republican senators, have pointed out that duties are ultimately tax. And it is it that the party is fiercely opposed to tax increases.
The end of the rule -based world order?
For decades, the global economy has been spinning largely through the system created by the Americans.
China and Russia have criticized the world order they considered Western.
Now Trump is at a fast pace to scrap that rule -based system. Canada and China have said that they are choosing the world’s trade organization WTO. The complaint may be mostly symbolic as the United States had already paralyzed in the first season of Trump the jurisdiction of the organization.
The system based on the power balance of the superpowers is very well suited to China, but it is extremely dangerous for Finland and other Europe.
At the same time, Trump has proven to be an unreliable negotiating partner. He has not hesitated to attack the US long -time allies and partners Canada and Mexico.
The North American Free Trade Agreement NAFTA in 1994 was renewed at Trump’s request in his first season and replaced by a new USMCA agreement.
Now Trump’s first work is at first attacking that agreement.
Economists seem to be almost unanimous that Trump’s duties are harmful.
The world’s leading economic magazines and numerous US economic organizations have been very much in the context of the new trade war.
Still, the United States also seems to turn its foreign policy direction more and more, according to one -minded headquarters. It doesn’t help, even though economic wisdom, investors and even many of their party politicians are terrified.
And it can be a bigger thing for the world.