U.S. president Donald Trump took the full planet for hostage to his trade war. However, its unpredictability has already led to an eye-for-eye reaction. The profitability of US government bonds increased importantly in just a fewer days.
— These are the first signs that bonds are no longer so popular among investors, making US debt more expensive, says chief economist Raiffeisen Fredy Hasenmaile. That's precisely what Trump can't afford.
Rumor has it that countries like Japan and China sold US government bonds on a large scale, throwing Trump on his knees. These 2 countries hold the most U.S. government bonds abroad. president of the United States, withholding duties on WednesdayHe himself admitted that the improvement of government bonds was a factor.
Trump actually recognized problems in his country: strong dollar weakens its export capacity and encourages companies to decision factories abroad. The immense amount of debt must be reduced. Indeed, any trading partners treat the United States unfairly. The trade deficit that has existed for decades is simply a problem.
"To Control"
Last year trade deficit increased to almost 920 billion dollars. ($3.4 trillion). This means that more goods were coming from abroad than the other. “The trade deficit is not as bad as you always hear. However, this is simply a situation that cannot be maintained in the long term. Debt cannot simply grow further, says Fredy Hasenmaile.
There is simply a request for action. However, it is not as severe as Trump's abroad policy might suggest. — Compared to the US gross home product, which amounts to $28.8 trillion (108 trillion), the deficit in abroad trade is manageable, added the expert.
The negative trade balance is usually balanced over the average term. request for trade partners' currencies increases, dollar becomes oversupply and loses value. As a result, import becomes more costly and American companies can export cheaper abroad. Business location becomes more competitive, attracts fresh companies, and exports besides grow. But this is precisely what doesn't work in the US.
Special case of the dollar
— With a dollar as a global currency, USA is simply a peculiar case. Most of the world's trade takes place in American currency, and US government bonds are considered safe, says Hasenmaile. As a result, quite a few money is coming to the US and request for the dollar is high.
— So Trump is right, the dollar is overvalued,” explains the expert. This is mostly detrimental to the economical attractiveness of the location. The situation is further aggravated by the fact that, for example, EU imposes higher tariffs on US cars than vice versa or China over-supports its own economy with subsidies.
However, a strong dollar besides benefits the US. “ Thanks to the large amount of capital flowing into the country, loans are beneficial,” Hasenmaile says. This means that private households and the state benefit from low interest rates.
However, favorable money tempts people to spend more. — The United States is surviving beyond its means. The advanced national budget deficit clearly shows where the strong growth in the American economy has taken place in fresh years, says Hasenmaile.
Amateur Approach
The budget deficit is causing a continuous increase in debt, which is now over 36 trillion dollars (135 trillion PLN). — It is done At the expense of the future of the United States “ Hasenmails say. Last year the United States had to pay about 1 trillion (US$3.7 trillion) interest on the top of the debt — and the trend is increasing. This is almost 15% of the national budget and now even more than military spending. Money that is lacking for crucial government tasks.
Government spending is to be reduced by the squad DOGE led by a billionaire Elona Muska. At the same time, however, Trump is planning a crucial tax reductions from wages and for companies that want to finance from customs revenue. On Wednesday, he suspended the tariff for 90 days against 75 trading partners and introduced a basic tariff of 10% for virtually all of them. Probably. However, he will not even be able to cover the planned cuts by taxation revenues from this., not to mention the simplification of the budget deficit, which last year amounted to 2 trillion dollars (7,5 trillion PLN).
— Trump's current approach is amateur and half-time. all day he's in power, he does more damage. There is no thoughtful plan, and global uncertainty is enormous,” Hasenmaile says.
