The angry Twitter user, the golden-haired business and reality TV personality, and the current president of the US, Donald Trump, might not be doing any favors to America right now. The proponent of the “beautiful wall” has some ideas that are not making America so great after all. When you look at the existing image of the US in the international community, it has worsened pretty quickly in the last one and a half year. All the attempts of making America great again, bringing industries back in the country, and putting an end to outsourcing haven’t yielded the best results. Call it Matriphagy or some other fancy word, but America needs to find a way to recovery as soon as possible.
The Overall Financial Impact of Trump’s Policies
From tax cuts to putting additional tariffs on existing imports, Trump administration has been quite quick to change financial policies. These policies have internal as well as external effects. The current notion is that America is on a path that will eventually isolate it from the rest of the international community. More importantly, the US government is not treating its allies very well too. Some of the recent financial policies are going to harm its trade ties with its allies as well.
One of the groups of people who have already started suffer in the hands of Trump’s financial actions are soybean farmers in the US. Under the label of unfair trade practices, Trump has gone to the extent of announcing tariffs of $50 billion on the products coming solely from China. Of course, China had to retaliate and it did. China reciprocated America’s favor by putting $50 billion tariffs on its products as well. Soybean is one of the products that the new tariffs will affect.
The harvest season has come and the stakeholders in the soybean industry have already started to complain to the government. Farmers are not getting the price for their work like before. The prices have started to fall and if the trade war continues to worsen between the countries, soybean farmers are going to suffer big time. As per the American Soybean Association, just in 2017 China bought nearly 60% of all the soybean that America produced. However, with the current prices, the industry is already looking at a drop of nearly $6 billion in the exports.
What makes the whole situation more interesting is the fact that most of the farmers are republicans. If the current trade issues with China result in hurting farmers, Trump might just end up losing his existing votes and supporters.
The tariffs on steel imports have received criticism from other countries as well. The 25% duty on steel trades to the US is a big hit for countries that are a major contributor to America’s steel imports. Economists had already predicted that the tariffs on one of America’s largest industries would cost the country nearly 400,000 jobs. However, other countries have also suffered due to the new tariffs. The decision of the additional tariffs was definitely going in the favor of homeland steel companies but any other industries that rely on imported steel will suffer today and in the coming times.
Trump’s Financial Policies Are Instigating Retaliation
One of the issues with Trump’s strict and blatantly applied policies is that they have filled its neighboring and other global countries with retaliation. You can’t make things hard for other countries and expect them to welcome your efforts. One must keep in mind that the goods traded between the US and European Union are taxed at less than three percent on average. What’s the tariff on steel imports? A huge 25%! What could be more infuriating than Trump putting a 25% tariff on steel imports? Keeping that tariff the same for everyone – including its allies. To make it worse, the president has decided to keep it the same for NAFTA members i.e. Canada and Mexico.
Now, you have EU, Canada, and Mexico preparing their plans to put tariffs on US imports. The retaliatory trade is waking up and you don’t have to research to know who is to blame for that. Cecilia Malmstrom, the Trade Commissioner of European Union, has already announced that the Union will take measures to balance the trade deficit that will arise as a result of the new tariffs from the US. The products that you can expect with increased tariffs include motorcycle exports, jeans, and American Bourbon.
It is shocking that Trump did not sit down and come up with a different plan for its top trading partners. What the US president has failed to realize while taking those measures is that these countries have good trade partnerships with other countries as well. In short, they will find alternatives much easily than US will. The new financial policies of the US aren’t favoring any countries so finding alternatives will be hard for the country. America’s best ally, at the moment, is America itself.
America and China are having the wildest war right now. It was clear from day one that other than Mexico, China was going to be the next target of president Trump. The additional tariffs on Chinese products had already come into action in July. The US put a 25% tariff on Chinese products that amounted to a total of $34 billion. Retaliation from China was immediate. The country with the largest population sent an answer to the US in the shape of introducing a 25% tariff on $34 billion worth of American products.
As one could expect from the president of the US, he did not hold back from going a step ahead. He had already announced that he was going to be strict with other countries to bring benefits back to America. In response to China’s Retaliation, the US went on to introduce even more tariffs. This time, nearly $16 billion worth of more products added to the list. Since then, China and the US have been in the fiercest trade war of the recent history. But the show has not stopped yet. The US is on the verge of adding some more products to the list.
This time, the US is going to add $200 billion worth of products to the list of items that will now have a 25% tariff. It could be the first time when the US will have the upper hand on China. That’s because China does not import that many products from the US. The new items include a lot of electronic goods such as the semi-conductors and selfie-sticks, etc. Despite China not having enough US-imported products, the country is not going to hold back its retaliation. China says it will put additional yet variable tariff on more US products that amount to a total trade sum of $60 billion.
The important point to note here is that China will keep its tariff at a variable rate this time. The country believes that it will keep the tariff a bit loose on the products that it considers crucial for the economy of its country. While China has interest in talking about a resolution to the problem, the Trump administration seems in no mood to talk about trade with China. The recent views from the experts and economists incline towards the idea that China will be the first one to blink in this war. However, the tension between the two large economies of the world will affect the global supply chain and trade.
America Is Giving Way to Other Countries to be the Global Leaders
How much America benefits from Trump’s recent financial policies is one thing. The more important matter is that the image of the country has not been a very clean one due to its unfriendly attitude towards other countries and allies. It renegotiated NAFTA and took a shocking approach towards the global environmental issues. It has been considering the importance of WTO, implying that WTO might not be working in the best interests of America.
It is simple: when you are ruining your trade ties with countries, you will have to rely on your closest trade partners for alternatives. But what if you are destroying your relations with these partners as well? That’s what it looks like after a report from German media claimed that Donald Trump is looking into stopping the import of German cars into the country. It is believed that America will cite “national security” as the reason for stopping the imports.
This news has already started to affect the German automobile market. As soon as the report came out, the shares of the largest German car makers started to trade low on the stock market. There was a one percent decrease in the share value of companies like Volkswagen, Porsche and Daimler. Many American economists came forward to express their reaction to the proposal. Most of them believe that Trump’s actions are going to hurt not just the trade ties but the friendly alliance with other countries as well.
Such steps have put American global leadership in danger. Experts believe that America would lose its influence in the global economy very soon if such decision continued to come. Some economists believe that the situation that exists today is completely different from the one at the time of Second World War. According to him, America is the only country that’s instigating trade wars and retaliatory trade actions from other countries right now. As a result, all the countries are now looking for other trade partners than America. Soon, this will result in America being alone in the international financial market.
America has a protectionist stand right now. The country is not expanding or improving its trade. Instead, it is focusing on protecting its interests only. However, America is only one country, and its actions are not going to send other countries in the protectionist mode. That’s because they have other countries to start trades with. When America vanishes from the global financial market, it will leave room for other large economies to take the throne and lead the way. The potential leaders could be China or European Nation. No matter which country takes over, it will be the end of global economic leadership of America.
Trump’s Unfriendliness Will Harm America Even More
On the trading forefront, it is clear that Trump wants to put America first even if this policy results in angering its allies and closest trade partners. However, you would expect the president to be friendly in other areas so America can create better and newer trade ties with other countries. However, it does not seem like president Trump has any interest in befriending any countries. The hostile and mocking tweets from the president for England’s Mayor, North Korean leader Kim Jong-un, and other well-known leaders of the countries make him an unfriendly personality.
His presence on Twitter has constantly been a center of criticism. In simple words, the people in other countries don’t seem to like him. Even the guys around him are somewhat concerned about the way he wants to run the country. A friend of the president, namely Chris Ruddy, said once that Donald Trump always wanted and claimed to have no other advisors and generals than himself. Chinese political officials have called Donald Trump less intelligent than the shopkeepers. According to them, even the shopkeepers have a basic understand of their reputations, that it matters to them the most. On the other hand, the American president seems least concerned about his reputation.
The Tax Cuts and Jobs Acts seemed like a fair deal to the American people due to the lowest taxable brackets coming back. However, economists believe that when your trade policies are going to do the damage you wanted to protect through tax reforms, you are going to suffer in the end. Donald J. Trump has to realize that countries are responding to his financial policies only in the shape of retaliatory actions right now. However, once they started reforming their trade relationships and ended up creating new treaties and trade cooperation, it will be difficult for the US to regain its economic leadership.