Liberation Day is here. Trump has announced his tariffs targeting the US’s biggest trading partners, delivering one of the biggest blows to the global economy since the pandemic—and hitting the US especially hard.
Likely countermeasures will target the heart of the US economy: its service sector – including Google, Facebook, Mastercard, Visa, Booking, and many other big players – which has been central to the US’s economic supremacy in recent decades. Last year alone, this sector generated USD 1tn abroad, with a surplus of USD 300bn.
The consequences could be so painful for the US that Trump might reconsider his approach. But even if he does, the damage is already done. Even if he backs off from his most severe tariffs, his words and signature mean nothing. Neither friend nor foe can trust him to keep his promises or refrain from reversing them.
As long as Trump remains president, the US will be stuck in this loss of trust, and his inability to grasp complexity, narcissism and unpredictability will undermine America’s influence and economy.
Trump’s position not unassailable
Alternatively, while it might seem unimaginable today, it’s not entirely unrealistic to think he will not last four years. If the US economy deteriorates, his support may evaporate and collapse so dramatically that Republicans could decide to remove him from office before his term ends.
But if it’s not Trump, who would replace him? The Republican Party has been transformed with Trump at its centre. His vice president is unpopular, and the Democrats are in disarray, facing a potential rise in left-wing populism that could be just as damaging to America as Trump himself. A political vacuum resulting from chaos in Washington could have dire consequences on the global stage: consequences that are difficult to envision today.
Turkish President Recep Tayyip Erdogan and Israel Prime Minister Benjamin Netanyahu have already taken advantage of Trump’s rise to weaken democratic checks. This global trend could accelerate further. Worst of all, some of the greatest risks centre on China. The Trump-Biden strategy to contain China never had the long-term potential to stop its rise; only to make it more independent and less reliant on cooperation with the US.
If a political vacuum occurs, the US could lose the leverage it holds over the Chinese Communist Party, potentially giving Beijing the perfect opportunity to move on Taiwan. China has been preparing for such a moment. This may sound far-fetched, but it is increasingly more realistic than we may like to believe.
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