In a trade war with the remainder of the world, the U.S. could lose the most

pracodawcagodnyzaufania.pl 3 months ago

– president Trump's many decisions, not only in the economical field, are simply based on irrational considerations, are false, are harmful to the US, and for others, speaking popular language, are sick – he evaluates in conversation with Newseria's news agency prof. Grzegorz Kolodko, b. Finance Minister, lecturer at the Kozminski Academy.

At the same time, it points to chaos caused by the introduction, suspension and restoration of duties. The economist in the book "Trump 2.0. The Revolution of sick Reason" examines Trumponomis, that is, the economics and economical policy of the president's thought and its impact on the economy, warns against threats and indicates ways out of expanding global confusion. The author besides assesses the negative non-economic aspects of the activities of the American president but for 1 aspect.

Mistaken economical reasoning

– I believe that his assumptions about what he calls making America large again are based on misconceptions of the economy. In particular, it is madness to impose customs tariffs and then suspend them, cancel and reimpose them, harm global trade, economical cooperation, disrupt average management, and increase inflation processes, even in the United States itself, or origin disruptions in financial markets," says prof. Grzegorz Kolodko. – In terms of common sense, these are decisions a small crazy and I don't truly realize it.

Donald Trump's second presidency began on 20 January 2025, erstwhile the effective US tariff rate was 2.5 percent. The first policy nonsubjective of the fresh administration has become the largest trading partners, Mexico and Canada, as well as the EU and China. On 2 April Trump announced the alleged day of liberation, erstwhile he presented a list of dozens of countries with differentiated customs rates from 10% to 49%.

President Trump's behaviour forces all trading partners to negociate with him

As a result, the effective rate jumped to 27 percent. However, most duties were suspended for 90 days (until 9 July). On the way, however, the U.S. president threatened the EU with a 50-percent stake, which was due to apply from June, after which he suspended it until 9 July. The suspension of duties was not covered by China. A fresh installment of the trade war with the mediate State led to an increase in customs in the US for Chinese goods to 145% and, in response, to an increase in customs in China for American goods to 125%. In the end, both countries reached an agreement to reduce duties by 115 pp., with an additional 10-percent work maintained. However, the agreement concerns a transitional negotiation period.

– Trump or any of his supporters sometimes say this is part of the negotiation. The fear of imposing duties alone means that we gotta adapt to it, something should be done about it. Looking instrumentally at this, president Trump's behaviour forces all trading partners to negociate with him. It may besides encourage us to behave in a way that will aid us, in the short term, in the American economy, but in the longer term, and this peculiar Trumponomika does not understand, it will harm everyone – says prof. Grzegorz Kolodko. "However, I believe that the losses are more likely to be borne by the Americans than by the Chinese or the EU, for example, although the EU is frequently even worse off than China for a good or alternatively bad cause.

The US will proceed to grow, but at a slower rate

Customs policy not only caused the stock marketplace collapses (after suspension was reflected) and the revision of economical forecasts for the US. In the March national Reserve projection, the GDP growth forecast for 2025 was reduced to 1.5-1.9% compared to 1.8-2.2% projected in December 2024. Median forecasts for this year are presently 1.7% (compared to 2.1% in December projection). The median forecasts for 2026 and 2027 were besides somewhat reduced. The OECD besides foresees a lower outlook for growth. In the study of early June, the organization predicts that the American economy will grow by 1.6% in 2025, alternatively than 2.2% as expected in March. The forecast for 2026 was reduced to 1.5% of erstwhile 1.6%.

"The US will proceed to develop, but at a slower pace than it would have been with the continuation of the erstwhile policy. It will proceed to be a large country, but not in the way Trump wants it, due to the fact that he would like to strengthen the American position, weakening others: China, our European Union, on the good origin of the remainder of the world, due to the fact that he declared a trade war on the full planet – the erstwhile Minister of Finance points out. “And this is what many American economists and politicians understand, that the alleged Trumponomika, i.e. economy and economical policy according to Trump, harms American economical interests, and these damages will become more pronounced over time.

Customs duties are included in prices that are then valid on the US market

Prof. Kolodko points out that higher duties will not consequence in proportionally higher budget revenues, as trade will cease to be profitable and its volume will fall. In addition, those products, which will be imported into the States despite duties, will become little accessible to consumers due to the higher price, conquered by duties.

– Trump thinks this way: we import, buy goods from abroad for 100 billion dollars, if we impose 50-percent duties on these goods, they will pay 50 billion dollars. A double error, the first one, not them, which means we, who export there, only the Americans, due to the fact that duties include prices that are then valid on the American market. Secondly, if specified duties are imposed, at least 50 %, specified as those from threats to the EU, the value, the volume of our exports to the US is falling, and even if these duties are being collected, it is from far smaller amounts than Trump had previously assumed. From this point of view, it does not only harm trade, but it besides worsens the financial situation, including the US budget, and it is already in a dire state, due to the fact that the American deficit of specified a powerful, rich state is already around 7% of their national income and they are bending under the burden of debt, and this debt continues to grow, like an economist.