Globalization made America rich. Now, Trump's tariffs may upend it.
Category: News & Politics
Via: john-russell • 3 weeks ago • 22 commentsBy: Alexander Smith (NBC News)
S E E D E D C O N T E N T
By Alexander Smith
LONDON — International markets are in free fall, American allies are rattled and analysts warn that globalization as the world knows it may be crumbling.
President Donald Trump has since his first term been unafraid of treating America's friends more like its adversaries. But his worldwide tariffs have the potential to reshape the global economy, and with it the lives and financial health of billions of people.
In this new, topsy-turvy world order, the United States has applied the same 10% baseline tariff to its transatlantic partner the United Kingdom as it has to the Taliban rulers of Afghanistan. The European Union, meanwhile, has a higher rate than North Korea.
E.U. foreign ministers were meeting Monday in Luxembourg to discuss their response. Though some inside the bloc, such as Italy, favor de-escalation, other influential figures want retaliation.
Stocks continued to plunge in Sydney on Monday.David Gray / AFP - Getty Images
French President Emmanuel Macron is lobbying for a full freeze on European investment in the U.S., and European Commission President Ursula von der Leyen has already vowed retaliatory countermeasures for the "spiral" of chaos.
It's unclear whether this is Trump's actual trade policy or merely a hostile negotiating tactic. But after a weekend in which he doubled down rather than backing down, stock indexes tumbled early Monday in Asia, the Middle East and Europe.
"This is possibly one of the most significant moves in trade policy that we've seen in a long time — maybe even generation," said Pranesh Narayanan, a research fellow at the Institute for Public Policy Research, a London think tank.
He says it's no exaggeration to talk about the end of globalization as the world knows it. The international system of manufacturing and trade has, since the early 20th century, seen the U.S. become the world's dominant superpower.
"There is going to be an enormous impact on the global economy. Companies will ask: 'Can I still do business in the U.S.?'" Narayanan said. "The decisions they make off the back of that are going to reshape global trade."
The U.S. is not only the world's largest economy — its gross domestic product is worth $27 trillion — but the dollar serves as the backbone of international trade and is used in around 90% of foreign exchange transactions. American interests have landscaped the entire topography of global trade, with the U.S. government at the forefront of shaping postwar institutions such as the International Monetary Fund and the World Bank.
Trade and markets aside, most economists agree that the upshot will be simple: higher everyday prices, including for Americans. Trump's tariffs — and the inevitable response — will mean companies will be paying more to produce and distribute goods and services. Such price hikes are frequently handed onto consumers.
President Donald Trump speaks to reporters on Air Force One on Sunday.Mandel Ngan / AFP - Getty Images
"The tariffs may be effective in achieving one thing: making the U.S. less investable, eroding its soft power, and reducing financial flows into the U.S.," Thiemo Fetzer, an economics professor at England's University of Warwick, told NBC News in an email.
"This will lead to a devaluation of the dollar that will just increase the economic pain for U.S. consumers," he added, given that a lower value currency makes foreign products more expensive.
Some within Trump's camp have suggested this is all a hardball negotiating strategy.
"I wouldn't want to be the last country that tries to negotiate a trade deal with @realDonaldTrump," Eric Trump, one of Trump's sons, wrote on X last week. "The first to negotiate will win — the last will absolutely lose."
But the president has poured cold water on this, posting on Truth Social on Friday that his policies would "never change." He told reporters aboard Air Force One late Sunday that it was necessary to "take medicine" to fix what he sees as a trade imbalance.
NBC News has contacted the White House for comment on the widespread criticisms and fallout.
Such a wide use of import taxes should be no surprise for a president who once described himself as "Tariff Man." His first-term tariffs principally targeted China, and were upheld by his successor, Joe Biden.
This time, however, Trump has imposed a blanket 10% tariff on almost every country — including penguin-inhabited islands — while skipping Russia and North Korea. Meanwhile, the E.U. faces a 20% tariff and China of up to 54%.
Beijing was swift to retaliate with its own 34% levy, escalating a trade war the cost of which will ultimately land at the feet of consumers.
London's FTSE 100 index slid more than 5% shortly after Monday's market open, deepening last week's losses.Henry Nicholls / AFP - Getty Images
Others are less sure of how to respond.
There has been consternation and even mockery in the U.K., where Prime Minister Keir Starmer had bent over backward lavishing Trump with praise only to find himself punished like everyone else.
Some financial analysts have argued in recent days that Trump risks a return to the 1930s, when Congress passed the Smoot-Hawley Tariff Act in an attempt to boost revenue and halt the Great Depression. Despite Trump's claim that a lack of tariffs caused the depression, economists say the 1930 act deepened the rout.
Aurelien Saussay, an assistant professor at the London School of Economics, says one must go even further into history, to 1900, to find precedent for Trump's moves.
"The U.S. was a very different country; it was an emerging country catching up to industrialized nations like France and Germany," he added, describing the current policies as "absurd."
While the U.S. may have led globalization in the 1990s, the world is too interconnected for Trump to undo a complex web of global trade alone, he said.
Even without Washington's participation, Saussay said, "you would still have globalization working in a very similar fashion as it used to — just without the U.S."
Alexander Smith
Alexander Smith is a senior reporter for NBC News Digital based in London.
Tags
Who is online
57 visitors
Anyone with a brain is asking and wondering why Trump is doing this. There doesnt seem to be any answer.
Oh wait, he gets to say, as he did in a speech last night, that the countries of the world are calling him and "kissing my ass."
Trump will break everything in sight for the pleasure of having people and countries grovel before him.
Penguins have lips?
I actually think that’s it. There’s no economic wisdom there. He’s just a bully. But that’s not new.
The really weird part is the people around him who have bought into this economic dysphoria, where we’re the richest country in the world, but these people think we’re getting screwed.
Opposition politics has forced Trump to use extreme measures to get anything done. Trump has to overwhelm the resistance with fast implementation of extreme positions before the opposition can stall, slow walk, and impede. Trump is applying lessons learned from Joe Biden's Build Back Better legislation that was held hostage by opposition politics. So far, the best the opposition has done was organizing nationwide 'Hands Off' protests that were two weeks too late.
Trump has only been in office 79 days of his second term (as of 9 April 2025). Trump has 1,019 days to tweak and adjust his extreme positions. Opposition politics has made it easier to step back from extreme, harsh positions than try to negotiate. Opposition politics has been using compromise as a political weapon. Trump going to the extreme forces the opposition to beg for negotiations and compromise with Trump. Trump is now holding the opposition hostage.
Trump is following one of his 'what-me-worry' dictums: gamble with someone else's money.
Isn't that what all governments do? Yeah, thought so.
Do you seriously not recognize the damage that Trump has done and continues to do? How can anyone, at this point, continue to support this lunatic?
Of course that is fine as long as your last name isn't Trump.
Thinking and knowing are dimensions apart.
I dunno. But I had to tell Mr G to shut the hell up last night because he supports these tariffs. I really wanted to rip him apart and tell him he doesn't know shit from shinola. But we were going to dinner with family
What damage?
What is the point of asking such a stupid question?
That is the problem. Too many people do not understand what Trump is doing. Unfortunately it will probably take a direct hit on their personal finances before they realize what is going on. If then.
Good luck TG with your very awkward situation.
Seems to be many on the lefts go to.
Prior to listening to his reasoning? That sounds about right.
Whoa Jim, you have zero idea what their relationship is actually like. Here's a hint, they go fishing together and as of yet neither has ended up as cut bait.
thank-you
lol
You too? Me and Shinola go way back!
You're from Detroit?
This tariff kerfuffle is essentially between the US and China. We hold a better hand, and China will likely capitulate and go into negations, as well as other nations. Trumps approval numbers remain high
Look at This CNN Host's Face During This Segment About Trump's Approval Numbers
Bessent Had the Perfect Response to China Raising Tariffs on US Goods
Went to the link re approval numbers and nary a one were about approving. Just Townhall posting another one of its clickbait headlines.