Europe and UK spared for nowpublished at 13:32 Greenwich Mean Time
Faisal Islam
Economics editor
Trump is using tariffs as a weapon of diplomacy, even
coercion on topics entirely unrelated to global trade.
Are the leaders of G20
nations with their own domestic audiences really going to roll over in order to
give the new president a win?
They could choose to wait out the inevitable
impact of Trump applying a 25% increase on the cost of two-fifths of US imports
on US consumers and inflation.
What is also clear is that the appointment of Scott Bessent as Treasury secretary will not temper the tariff push.
Amid the battle for his
nomination he went out of his way to acknowledge the power of tariffs as a tool
that had been pioneered by Alexander Hamilton himself, the first ever US
Treasury secretary.
Earlier this year he had suggested tariffs might be used
tactically, but the main tool for the US rejuvenation of manufacturing would be
a cheaper dollar.
Europe and the UK have been spared for now. But it is
important to reiterate that these moves are not even the real bulk of the
tariff policy outlined by Trump.
He wants to fundamentally change the global
economic map, and reduce China and Europe’s trade surplus with the US which he
views as “ripping off America”.
The world is far more complicated now, however,
than these binary economic relationships. The US is undoubtedly powerful enough
to start rebalancing world trade. Push things too far, however, especially with
G7 and G20 allies, and the US might find itself rather too isolated.