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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher
Lawyers and accountants in Washington DC are licking their lips at the thought of the money they will make from the trade war incoming US president Donald Trump will wage on China, the European Union and other countries, even if it pushes the interest rates in the economies of US allies to “emergency levels” and hurt ordinary American citizens.
The director of bond giant Pimco, Andrew Balls, expects there to be “multiple rounds of the game” regarding tariffs, a policy repeatedly threatened by Donald Trump.
“The worst version of the trade situation would be difficult [for Europe],” Balls told the Financial Times.
However, as the scenario approaches, European assets have been the biggest losers so far. In anticipation of further interest rate cuts by the European Central Bank (ECB), which is hitting investment returns, the euro had fallen by more than 5% against the dollar by the end of September.
In his view, the euro will likely fall further against the dollar as the bet is on the ECB’s deposit rate, falling to 1.75% from the current level of 3.25%. This is because European interest rates have already been negative and have only had to be tightened to contain post-COVID-19 pandemic inflation.
According to the British daily, some investors saw Trump’s nominee for Treasury Secretary, hedge fund manager Scott Bessent, as a moderating influence on the future US president’s more radical economic policies, which partly justifies the dollar’s decline following the US election. But overall, according to Balls, the looming global trade war leaves room for lower so-called terminal interest rates.
He added that a hit to the UK’s economy from a global trade war would also leave “plenty of room” to lower so-called terminal interest rates. Investors currently expect the Bank of England to make three quarter-point cuts by the end of next year, which would take British rates to 4%.
The same outlet also reported that lawyers and accountants in Washington are set to be busy as companies prepare for tariffs, export controls and trade wars when Trump enters the White House next month.
“I said to my colleagues — we’re bringing sexy back to trade,” said Nicole Bivens Collinson, managing principal at law firm Sandler, Travis & Rosenberg. Bivens Collinson said the firm was looking at international expansion. “We are getting a lot of new clients, a lot of new people approaching us.”
Last month, Trump won a sweeping electoral victory after campaigning on a pledge to apply levies of up to 20 percent on all imports and 60 percent on those from China. He has also threatened to hit Mexico and Canada with 25 percent levies.
During the last Trump administration, companies were offered a chance to apply to be “excluded” from having tariffs applied to their imports from China. Between 2018 and December 2020, the Office of the US Trade Representative processed 53,000 requests. However, a review of the process found that almost 90 percent of those requests were denied. Nonetheless, some companies today are exploring ways to sidestep potential tariffs.
“It’s been busy since 2016, but I can tell you already that overnight it’s exploded,” said one trade lawyer for a major firm, who did not want to be named. “There is a lot of interest in suing the Trump administration, everyone around town is preparing a lawsuit.”
It is recalled that Trump also threatened on November 30 to impose “100% tariffs” on BRICS countries if they do not abandon their plan to create an alternative currency to the US dollar.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy,” Trump said on Truth Social.
In effect, Trump has threatened to impose tariffs on enemies and allies.
While lawyers and accountants in Washington are set to make great profits by helping their clients avoid expected tariffs and export controls, ordinary Americans, and not just the citizens of tariffed countries, will be economically hurt.
The nonpartisan Peterson Institute for International Economics has estimated that Trump’s new proposed tariffs would lower American incomes, ranging from around 4% for the poorest fifth to around 2% for the wealthiest fifth. The think tank estimates that a typical Middle-Class household would lose around $1,700 each year.
Yet, despite the predicted negativity that tariffs will bring to US enemies, allies and citizens alike, it appears Trump is determined to impose them once he enters office next month.
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south front’s forecast features the standard fare from nato propaganda channels: unprovoked attacks on putin, bizarre assertions about syria being a major headache for russia, and a predictable flurry of insults once their reasoning breaks down (as it tends to do).
really, i don’t see anything? where do you read?
syria has been set up to be a major propaganda headache for putib who now has offered exile to the evil dictator who’s wife for example has now been refused entry to england as undesirable .
biden took over and continued trump policies. ultimately i think these will not be beneficial for the us in the medium to long term. it is hurting its allies and force china to become more independent. all of this is based on a flawed notion of american superiority instilled in every american child during his/her education. but now it is china that is investing massively in its education while the us prefer stupid people.
it is quite clearly a case of believing its own propaganda while being unable to confront what reality is. the us is a big economy, but separating it from the rest of the world will lead to it being unable to have the same economies of scale that other countries will be able to have. since 2016, no reshoring or frienshoring occured despite all the sanctions and tariffs.
nor really most other countries regardless of their propafanda falsehoods want their goods exchanged for american dollars still. except those who’ve bought gold ,ie china and russia and all of the central banks. but that’s nor what it seems either because china and russia buy the gold dug out of china and russia via swizz sources..
they don’t own their own natural resources like gold mines .they’re privatised well who do you think did that since london sets the global.gold price and gold is one of englands main exports ?it’s sold via switzerland as the go between .
are you woke, and what is it?
the us doesn’t prefer stupid people, it’s corrupted bureaucracies do .
wouldn’t it be nice if the xi made the most profound announcement at the un security council why the genocide in palestine, lebanon, syria and ukraine must stop and that for these reasons alone it will be vacating it’s seat the un and that “an attack on russia is an attack on the prc”!… wouldn’t it be fun just to watch the western market(s) on an announcement like that???…
it would push gold prices up .who benefits ?
not the $usd and all it’s hangers on… and certainly not crypto.
journalists consistently fail to grasp the reality that economics is the most powerful.science ,so their observations are often quite inalid so the world is deceived by ommissions
i didn’t know this!
this is very complicated, will usa sell more now, or less, or the same?
who owns what they’re selling? that’s the question goods and services aren’t nationalised they’re privatised geography isn’t reflective of ownership .
yes they knew trump would agitate china so therefore they could use him .at the end of his term maybe he will have a replacement that can continue maga agendas but i suspect that the outcome regardless, will be america will have powerful enemies to contend with and another biden style mob member could easily exploit internal chaos to create the scenario of say the collapse of russia in ww1.very easily practice makes perfect.