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His guide of what the United States election means 2024 for Washington and the world
On March 3, Donald Trump made two very significant decisions. One was for impose rates In Canada and Mexico at a rate of 25 percent, as well as in Chinese imports at a 10 percent rate at the top of 10 percent imposed last month. TO 25 percent rate In EU imports it is expected to continue. Together, these four economies produce 61 percent of US imports of goods. The other and another more significant decision was to suspend US military aid to Ukraine, giving the country besieged what seems to be the choice of a hobson between surrender and defeat. Trump’s friend, Vladimir Putin, must be ecstatic: the president of the United States is destroying the West in his happy eyes.
These are simply two sets of decisions in the whirlwind that has accompanied Trump’s second presidency. But for the outside world, they are of great importance. They represent the end of liberal commercial relations, predictable and governed by the rules with the most powerful country in the world and also the one that created the system itself. They also represent the abandonment by the United States of alliances and central commitments in favor of a closer relationship with an ancient enemy. Trump clearly thinks that Russia is more important than Europe.
In both cases, he is very wrong. As Maurice ObstfeldThe former chief economist of the IMF, has pointed out that the US commercial deficits are not due to traps by commercial partners, but to the excess of their expenses on income: the largest determinant of the United States commercial deficits is their enormous federal fiscal deficit, currently in about 6 percent of GDP. The Senate controlled by Republicans They plan to make Trump Tax cuts 2017 permanent It guarantees that this deficit will persist at least while the markets finance it. Given this, attempts to close commercial deficits with rates are like trying to flatten a completely full balloon.
Understanding this would require some knowledge of macroeconomy, which Trump is completely lacking. But this is not his only madness. Trump also says: “Let’s be honest, the European Union formed to fuck the United States. That is the purpose of that. And they have done a good job. “In addition, Has said from Europe: “They do not take our cars, they do not take our agricultural products, they take almost nothing and we take everything.”
Both complaints are silly. The EU was formed to bring prosperous economic relations and political cooperation to a continent devastated by two horrible wars. The United States understood for a long time and actively promoted this sensible response. But that was, unfortunately, a we very different from the self -pity disorder of today.
In addition, as Danish economist, Jesper Rangvid Notes in his blog, Trump only looks at the bilateral trade of goods, ignoring the trade of services and capital gains and labor. It happens that the income that the US derives from their exports of services at least to the eurozone and capital yields and labor wages that have exported there compensated for its bilateral deficits in the goods. The general balance of the bilateral account of the Eurozone with the US. It is close to zero, not even this is important. But bilateral balances only in goods are even less significant than general bilateral balances. Given how his money earns, Trump has been executing a great deficit in goods. As soon as it seems to have done a lot of damage. (See graphics).
For Mexico and Canada, the economic costs of these rates will be high, since their exports of goods to the US were 27 % and 21 percent of GDP respectively, in 2023. exports of EU goods to the US to the US. However, it would still be an unjustifiable act of economic war, in fact, economically illiterate. The EU would have to retaliate. Transatlantic relationships would be permanently damaged.
Even the commercial war, although it is outrageous, Palan compared to the ambush of Volodymyr Zelenskyy in the oval office by the president and vice president of the United States last Friday and the subsequent suspension of military aid to Ukraine. The objective can be to force Zelenskyy to sign the mineral agreement. But the biggest problem is that Zelenskyy distrust Putin, for a good reason, and now he has no reason to trust Trump. Trump can also want a “peace agreement”, but why Putin would agree with a genuine if Ukraine is his to take?
Both men are underestimating the will of the Ukrainians to be free people. But if that goal must be achieved, Europe will have to assume the burden of ensuring its own defense as supporting that of Ukraine. Friedrich Merz, the next Chancellor of Germany, was right when he said that “his absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve the independence of the United States.” These steps must also be taken quickly. One will be to accelerate the transfer of more than 200 billion euros in Russian reserves seized to Ukraine. Another will be a great accumulation of defense now that the commitment of the United States with NATO has collapsed.
The EU Plus UK has a combined population 3.6 times the Russia and a GDP, in the purchasing power, 4.7 times larger. The problem, then, is not the lack of human or economic resources: if (a great SI) Europe could effectively cooperate, it could balance Russia militarily in the long term. But the difficulty is in the middle race, since Europe cannot make some crucial military teamson which he and Ukraine depend. Would the United States refuse to supply such weapons if Europeans buy them? Such a negative supply would be a moment of truth.
Trump is fighting an economic and political war on American allies and dependents. But the resulting collapse in confidence of the countries that used to share their values will end very expensive for the US.