It’s April, and the world is jittery as Trumponomics sets the agenda for a war that is bound to go beyond geographical boundaries and impact businesses, consumers, and governments across the globe. From Barbie to iPhones, chips to pharmaceutical drugs, and kitchen equipment to Halloween decor Well, it is a long list that highlights how in the last few decades the movement of ships was from China towards the largest market in the world—USA. It is time for the direction of ships to change so that Make America Great Again (MAGA) becomes a reality.
Declaring April 2 as “Liberation Day,” US President Donald Trump has announced a series of broad tariffs against trading partners, claiming that the punitive measures will bring jobs and industry back to the United States by combating what he calls unfair duties imposed by others on US goods. Trumponomics, based on the fundamental idea of reciprocal tariffs, seeks to achieve the larger goal of MAGA by trying to bring back the manufacturing factories and using the protectionist umbrella to give a boost to the American companies to reignite manufacturing. The series of tariffs announced have set the tone for tariff wars, with the EU taking the lead. India’s attempt to ease the impact is seeing a series of negotiations that may result in India reducing its tariff rates. The bloodbath in markets and business uncertainty among US-dependent companies is an indication of negative market sentiments taking over everywhere.
Trumponomics seems to defy economic rationale. The last phase of globalization has integrated economies beyond imagination. The microchip that is all-pervading in our lives goes across 70 national boundaries before it gets embedded in our phones, cars, microwaves, etc. The iconic Apple products are manufactured across over 400 sites in 27 countries. A car manufacturer in the USA is sourcing over 70 percent of its components from other countries.
The tariff policy to re-activate the American manufacturing ecosystem will come at a very high cost. Basic economic theory teaches that tariffs are inflationary in nature, and this would hurt the pampered American consumers the most. When prices of mobiles, toys, laptops, cars, clothing… well, everything that is a part of the average household consumption basket go up, it indicates erosion of standard of living. The inflationary pressure in the economy would also push up the Fed rate, leading to a negative impact on investment and consumption. When the American economy sneezes, the world economy will catch a cold! Trumponomics will trump all policymakers and push the economies across the globe into a downslide.
Economic cooperation in the last few decades led to unprecedented growth, a rise in income levels, and a standard of living. Trump’s narrow vision of MAGA marks the end of this economic cooperation and is a harbinger of chaos, uncertainty, and decline. With the threat of AI taking over all aspects of our lives, Trumponomics adds on to the unpredictability of our world. It is time for world leaders to realize that the best solutions to all our planet’s problems need cooperation and consensus. Will we trump against all odds, or will Trump override the successes of globalization and cooperation? Only time will tell!
Based on author’s blogpost at word press.
