How are global economies reacting to Trump's imminent return as U.S. president?

1 week ago 2

How are global economies reacting to Trump's imminent return as U.S. president?

How are global economies reacting to the imment return of President Trump and Trumponomics?

JUANA SUMMERS, HOST:

Donald Trump's election victory has inspired a series of significant moves in financial markets around the world. As Willem Marx reports, investors are racing to realign themselves for a new administration that may propel seismic changes in America's trade policy with global implications.

(SOUNDBITE OF ARCHIVED RECORDING)

DONALD TRUMP: To me, the most beautiful word in the dictionary is tariff.

WILLEM MARX, BYLINE: A new U.S. administration will often pursue fresh ideas on tax, spending and trade that affect companies and consumers alike. One thing global financial markets dislike is unpredictability, but that's something they should now expect, says Sebastien Jean, an economist at the French Institute for International Relations.

SEBASTIEN JEAN: Trump's presidency will open an era of increased uncertainty, and that's always pretty bad for trade.

MARX: But based on Donald Trump's last time in the White House, as well as his campaign pronouncements, many economists say there are some actions that investors are already anticipating. Products imported to the U.S. from overseas could face tariffs ranging anywhere 10 to 60%, which could disrupt international trade but also affect ordinary Americans, too, Jean says.

JEAN: If tariffs are applied across the board, this will have implications for consumers, and these implications would be increased prices.

MARX: Some experts estimate this could cost $2,600 per household, and higher prices could, in turn, mean higher inflation - something Trump said he'll end. Tariffs during his last presidency on steel imported from China failed to stimulate fresh steel production in the U.S., as then-President Trump promised people it would. Steel supplies were simply sourced from elsewhere instead. But reintroducing another trade war with China brings with it wider risks, too, says Francesca Ghiretti, a European economic security expert at the Rand think tank.

FRANCESCA GHIRETTI: You can start an escalation of tariffs and retaliation. And in a period where growth is already complicated, this can be very costly for the U.S. economy but also for the global economy.

MARX: One other economic casualty of a Trump administration could be climate-related investment.

ULRIKE MALMENDIER: There will be less push for financing means to combat climate change.

MARX: Ulrike Malmendier is an economist at Berkeley.

MALMENDIER: And that is really bad news for the world because the U.S. is a big part of the global economy. And not having them push alongside with other countries will make it extremely difficult to make progress.

MARX: That may also mean major price moves for metals and other commodities, like oil and gas. Meanwhile, the prospect of tax cuts and looser restrictions on regulation is helping drive positive reactions for some stocks. But there will be winners and losers in the corporate world, says Steve Woolcock of LSE Consulting, with companies reliant on global supply chains the worst-hit.

STEVE WOOLCOCK: Increased tariffs by the U.S., which would probably lead to retaliation by other major trading powers, would disrupt those existing supply chains, which leads to uncertainty, increased costs and therefore has a knock-on effect on companies, not to mention the knock-on effects on trade and growth and therefore employment as a whole.

MARX: With Trumponomics (ph) 2.0 now just 10 weeks away, investors, executives and foreign leaders will be watching what the next president chooses to do very closely. For NPR News, I'm Willem Marx in London.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Read Entire Article