The shift to US trade policy this year is a serious backlash not only for America but also for the rest of the world. The recent forecasts of the International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development highlight the global consequences- implications often not referring to the public debate in Washington.
According to these estimates, the overthrow of global trade and the constant uncertainty about political decisions may have led the global turning point. The success of the last decades in the fight against poverty and the improvement of living standards has been at stake.
Based on the duties in force when the forecasts were made, the World Bank estimates that global growth will be reduced by about one percentage point in the period 2025–2026. This means that the average annual growth rate will fall below 2.5%, that is, far below the usual levels of previous years. The IMF and the OECD generally agree, not only on the numbers but also on the causes: all three organizations emphasize the role of increased commercial barriers and increasing uncertainty. A new estimate by Bloomberg Economics predicts that if the new duties are maintained, the global economy will shrink by $ 1 trillion by 2030.
The first consequences mainly affect the United States and other developed economies. Recession of demand and investment activity, including direct foreign investment and portfolio investment, exacerbates damage, even affecting emerging and growing countries, which could theoretically benefit from diversion of trade. If there is an example of economic policy that damages everyone, it is.
Undoubtedly, under the present circumstances, all forecasts are accompanied by reservations. However, the risks are clearly tilted towards the negative side. Increasing the average “real” US duty of 2.3% in 2024 to about 15%, based on applicable measures, is impressive in itself: it has been the highest level for almost a century. On its own, this increase is sufficient to halt trade, disrupt critical supply chains and call into question previous investments. At the same time, it threatens with new waves of inflation, which could cause turmoil in financial markets, not just in the United States. Pressures over the Fed to reduce interest rates, coupled with the uncertainty over who will succeed Jerome Powell when his term expired in May further are further intensifying the climate of uncertainty.
And 15% may not be the ceiling. The White House believes that 50% of steel and aluminum duties are completely legitimate. In addition, continuous announcements about new duties has now integrated “strategic uncertainty” as a pressure tool: the aim is to keep traditional commercial partners in constant waiting, so as to become more vulnerable to intimidation. The result is that no agreement is considered stable or reliable and so no one is offered for long -term planning. And when Washington’s aspirations are not satisfied, as it is certain, new obstacles will follow: either really or just as a threat. Or not. No one can be sure.
Meanwhile, other countries are expected to respond with their own trade restrictions, while trying to reduce their dependence on US producers and consumers. Intense uncertainty will hurt investment, the main lever of growth. The gradual increase in global incomes observed in recent decades, already under pressure from the aging of the population, growing public debt, high long -term interest rates and geopolitical instability, will stop. And progress in the fight against global poverty will be stopped.
As the United States injures their own economy as these reckless people, they should also consider the burden they load on the rest of the world.
Source :Skai
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