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Your guide to what Trump’s second term for Washington, business and the world mean
Say what you like about Scott Bessent, but the insistence of the Treasury Secretary to seek logic in any tergiversation of the wrong Donald Trump tariff policy is providing a lot of amusement abroad. Bessent and other administration officials are now being made all over the world, desperately trying to sign dozens of trade agreements while the fractit financial markets metaphorically carry a weapon in their heads, and we are required to believe it is all a cunning plan.
Of course, Trump’s strategy is terrible: it is not even clear what he wants. But a less disabled administration would also be in trouble. Over the decades, the US LEVA to regain the global trading system – capital flows, advanced technology and access to its wide customers market – has weakened compared to China. Barack Obama called them the “indispensable nation”. In terms of trade and technological that are increasingly untrue.
During the Marshall Plan of World War II after a second, the US created a mainly Atlantic political economy in Western Europe. It offered not only Marshall financial aid but also advanced technology, and access to its growing consumer market.
These advantages are distributed. US aid budgets have been massively reduced compared to China, and the so -called Government Efficiency Department has more or less closed their latest clothing at the US Agency for International Development.
The US, especially under Joe Biden, worked hard to deprive China from advanced technology, especially semiconductors. But the failure to match the Chinese official and corporate investments, while sending wrong signals to the American industry, means it is well in most of the green technology. If a country wants to approve solar or wind energy or replace internal combustion engines with electric vehicles, including batteries, it will generally receive a lot of subsidized bag from China.
Rhodium group consulting estimates that China’s share of global exports in solar cells and modules was 53.5 percent in 2023, from 35.5 percent 10 years ago, and increased over 50 percent for lithium-ion batteries and semi-funded EVs.
US, using subsidies and protection fees for imports, has tried to build its own battery, EV and solar production for the domestic market. This week, a biden initiative was made in the announcement of mesospheric tariffs up to 3,521 percent in solar cells from South East Asian countries. This may be politically needed to keep the solar power alive in the US, but will never make it a competitive exporter.
Similarly, EU EU is trying to integrate Chinese production into its internal market. But US, its indigenous car industry reduced by trade protection to giant gas -taking trucks that no other country wants, is creating a high -priced, high -priced EV sector that cannot compete overseas.
If it cannot provide technology to provide commercial agreements, Surely SH.BA still has its domestic market as an incentive? Here she holds an advantage to China, which continues to follow an export -oriented growth model. OECD told me that in 2019, the last pre -vidic year for which they can calculate this data, the US portion of total imports of global goods was 15.4 percent, but its part of the final demand (which takes the added value at each stage of production) was 17.5 percent, much more than 9.7 percent of China and even 11.3 percent of the EU.
The US has long used market access as bait for trading partners to reduce tariffs, adopt US rules for intellectual property rights, etc. Perhaps the latest Hurray for this tactic was the partnership of transparency strictly, signed by 12 countries of Asia-Pacific in 2016 and created to surround China with economies oriented by US
But Congress held the deal before Trump withdrew the US in 2017. The glowing places went forward and turned TPP into a comprehensive and progressive “CPCP” CBA, harassing the provisions of IP involved in Washington’s insistence.
Since then, the prospects of using the US market for lever have decreased, not only because of the secular decline of the US part in the global economy, but due to the toxicity of trade agreements in Washington. The Biden administration tried to restore US influence on Asia-Pacific with the “Indo-Economic Economic Framework for Prosperity”. But this simply created annoyance in the region by trying to unite partner countries to adopt US job standards and other rules without providing export markets in return.
Trump’s idea is to threaten the market with high tariffs and then reset it in exchange for trade concessions. All the contagious and no carrot. The reliability of his threat to impose high duties of permanent imports is subject to the fund of financial markets, and his credibility in keeping those low taxes after an extremely suspected agreement.
In the global trade poker game, Trump inherited a weakening hand and is playing it extremely bad. Bessent and his other officials are in an unsafe position. SH.BA has no help, technology or market access to exercise control over global trade as it once did, and Trump’s messy behavior is rapidly increasing the possibility that it never wants.
alan.beattie@ft.com
