What’s The End Game?
The comments below are an edited and abridged synopsis of an article by Nomi Prins
When trade wars escalate and geopolitical tensions rise, economies can be badly damaged, leading to a vicious cycle of aggressive responses. US President Donald Trump could unilaterally slow, alter or even shut down various elements of global trade, and if he manages to do so, there will be a price to pay in jobs and in the world’s economic stability.
Allies of the US will undoubtedly try to trade more with each other to close gaps that Trump’s trade wars open. That will hurt the US and its workers, especially Trump’s base.
American allies who rely on the US market will lose out, too. Weighed down by tariffs, their products will become less competitive. However, that won’t mean the end of trade deficits; it could just mean less trade everywhere, a situation that brings to mind the global depression of the 1930s. And if you think Trump is already a threat to world stability, imagine what might happen after years of economic duress.
In Washington, Trump’s unique version of the imperial presidency seems to be expanding to fill any void as alliances like the G7 that were once so crucial to the way the US dominated much of the planet and its economy are being diminished. The question that should make everybody nervous is not yet answerable: What’s the end game?
The global economic system put in place after World War II was no longer working particularly well even before Trump’s trade wars began. Now, its flaws are being exacerbated. Once it becomes too expensive for certain companies to continue operating as their profits go to tariffs or tariffs deflect their customers elsewhere (or nowhere), one thing is certain: it will get worse.