The immense power of the United States has given glory, but now discrediting and distancing with its allies. Many announced tariffs have not been implemented, others have been modified by bilateral negotiations with the affected countries, after advertising, and others have suffered an extension, such as the 30% tariff for imports from Mexico and the European Union. Donald Trump uses the transactional form to govern.
The United States only represents 15% of world trade. If the governments that represent 85% join to impose their own tariffs on the US, Trump will have to rectify more than he has done.
The effect of tariffs on capital markets is immediate. When they are announced, the prices of the actions lower and, vice versa, when the rectifications are made, the prices rise. It also has repercussions on exchange rates.
Before the marginalization of commercial multilateralism made by Trump, now countries seek to strengthen their bilateral relations with EU to avoid punitive tariffs. It is a pragmatic answer. Countries also look for alternatives with other commercial partners. India and Brazil, for example, have created an alliance against Trump’s tariffs. This shows that the economic relations of influence are the result of an interaction.
The position of the US government in the application of tariffs is that, in this way, public spending will be financed, in addition to the reduction of the welfare state. However, there are gray points in the environment. One of them is the inflationary effect for the internal economy and another is that the countries that are now commercially overlapping with the United States will decrease their exports to that country to guide them towards other markets.
Commercial policy is becoming a geopolitical struggle instrument, which excludes cooperation as the axis of commercial relations.
The position of power of China is strengthened, which has been advancing in the global economy based on its productive organization. Some of its characteristics are as follows:
1.- The annual number of its university graduates has gone from one million in 2000 to 12 million now. Of these, half has titles in science, technology, engineering and mathematics. China has five times more graduates in these areas than the United States.
2.- There are currently six million Chinese in foreign universities.
3.- Chinese companies are associated with foreign companies, which has led to technological modernization. Internally, supply chains, expansion of the suppliers and innovative network have also increased.
4.- China has been industrially decentralized, making its 31 provinces in competition.
5.- The Chinese success of its manufacturing is the huge production scale that lowers costs, its greatest competitive advantage.
In the balance, the United States, in addition to its commercial unilateralism, has a military intervention. This shows that multilateral institutions are becoming irrelevant when war drums sound that the peace attempts drown.
