Ill Winds for the Global Economy
The trade war between the United States and China threatens the world’s economy
Major global institutions have been reporting signs of economic exhaustion for months. Two pieces of recent data from Germany and the World Trade Organization, respectively, corroborate this trend. Last Wednesday, Germany’s Federal Statistical Office reported that the country’s economy had shrunk by 0.1% in the second quarter of the year, verging on recession. The export-led gross domestic product slowdown in Germany was a product of the uncertainties of an eventual Brexit without a deal, and above all, from the trade war between the United States and China, which is linked to the second announcement, coming from the WTO. This organization reported yesterday that it expects the trade downturn to continue during the second quarter, and downgraded its Goods Trade Barometer to its lowest figure since 2010.
If the threat a trade war poses to the world economy is not enough to persuade Donald Trump of the need to unblock negotiations with China, the leader should at least consider the damage this will do to his own country. There is some indication of that in the American president’s decision to delay higher tariffs on some products (which was set for Sept. 1), giving in to corporate pressure so as not to impact the Christmas season.* If Trump does not substitute dialogue for his inflexible positions, he may do more harm than good to the interests the U.S. claims to defend. And those of the whole world.
*Editor's note: On Friday, Aug. 23, 2019, Trump increased tariffs on $250 billion worth of goods produced by China and imported by the U.S. from 25% to 30% effective Oct. 1.
Major global institutions have been reporting signs of economic exhaustion for months. Two pieces of recent data from Germany and the World Trade Organization, respectively, corroborate this trend. Last Wednesday, Germany’s Federal Statistical Office reported that the country’s economy had shrunk by 0.1% in the second quarter of the year, verging on recession. The export-led gross domestic product slowdown in Germany was a product of the uncertainties of an eventual Brexit without a deal, and above all, from the trade war between the United States and China, which is linked to the second announcement, coming from the WTO. This organization reported yesterday that it expects the trade downturn to continue during the second quarter, and downgraded its Goods Trade Barometer to its lowest figure since 2010.
If the threat a trade war poses to the world economy is not enough to persuade Donald Trump of the need to unblock negotiations with China, the leader should at least consider the damage this will do to his own country. There is some indication of that in the American president’s decision to delay higher tariffs on some products (which was set for Sept. 1), giving in to corporate pressure so as not to impact the Christmas season.* If Trump does not substitute dialogue for his inflexible positions, he may do more harm than good to the interests the U.S. claims to defend. And those of the whole world.
*Editor's note: On Friday, Aug. 23, 2019, Trump increased tariffs on $250 billion worth of goods produced by China and imported by the U.S. from 25% to 30% effective Oct. 1.
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