abomvubuso (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
abomvubuso) wrote in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png)
talkpolitics2025-04-05 10:34 pm
abomvubuso) wrote in talkpolitics2025-04-05 10:34 pm
Entry tags:
What will be the long term effects of the current global trade war?
The global trade war that has just escalated has already had ripple effects, and its long-term consequences are still unfolding. While the immediate impacts were widely analysed, here are some likely long-term effects:
1. Supply chain reconfiguration: Companies are increasingly diversifying supply chains to reduce dependency on single countries, especially China. This trend, often called "decoupling," could lead to more regionalized manufacturing (eg nearshoring to Mexico or Southeast Asia), investment shifts to countries like Vietnam, India, and Malaysia, increased costs in the short term, but potentially more resilient supply chains long term.
2. Erosion of the Global Trade System: The trade war undermines the role of the WTO and will set precedents for unilateral tariffs. It will also encourage other countries to adopt protectionist policies. It will weaken rules based systems that have governed global trade for decades.
3. Inflationary pressures: Tariffs raise import prices, which can increase costs for manufacturers and consumers, lead to persistent inflation if the trade barriers remain or escalate, and reduce economic efficiency and growth potential.
4. Shift in global alliances: Countries affected by US tariffs will seek closer trade ties with others (eg, China-EU, RCEP in Asia). The US's perceived unreliability in trade partnerships will lead to a loss of influence in setting global trade norms. We'll see a strengthening of trade blocs that exclude the US (CPTPP after US withdrawal from TPP).
5. Technological fragmentation: The US-China tech war has spurred dual systems in areas like semiconductors, 5G, and AI. We'll see long-term bifurcation in standards and ecosystems (Android vs HarmonyOS, US vs Chinese cloud services). We can expect strategic national investments in domestic tech industries (CHIPS Act, etc).
6. Strain on domestic industries: Some US industries (agriculture, automotive) will suffer from retaliatory tariffs. Government subsidies and bailouts will cushion the blow, but at a cost to taxpayers. Some sectors will adapt by finding new markets, while others will lose competitive edge globally.
7. Increased nationalism and populism in trade policy: The success of Trump's trade rhetoric has shifted the political center on trade. Even post-Trump administrations will become more skeptical of free trade. "Buy American" and reshoring policies may become permanent features of US economic policy.
8. Environmental and social implications: Localised production could lower some emissions from shipping, but less efficient manufacturing can offset this. Weakening global cooperation makes climate-related trade policies harder to implement.
So in brief, the long-term effects of the trade war sparked under Trump will include fractured global supply chains, weakened international trade rules, rising protectionism, and a shift toward economic nationalism. While some industries will adapt and new will alliances form, global trade will become more fragmented overall, less efficient, and more politicised, potentially slowing global economic growth and innovation significantly.
1. Supply chain reconfiguration: Companies are increasingly diversifying supply chains to reduce dependency on single countries, especially China. This trend, often called "decoupling," could lead to more regionalized manufacturing (eg nearshoring to Mexico or Southeast Asia), investment shifts to countries like Vietnam, India, and Malaysia, increased costs in the short term, but potentially more resilient supply chains long term.
2. Erosion of the Global Trade System: The trade war undermines the role of the WTO and will set precedents for unilateral tariffs. It will also encourage other countries to adopt protectionist policies. It will weaken rules based systems that have governed global trade for decades.
3. Inflationary pressures: Tariffs raise import prices, which can increase costs for manufacturers and consumers, lead to persistent inflation if the trade barriers remain or escalate, and reduce economic efficiency and growth potential.
4. Shift in global alliances: Countries affected by US tariffs will seek closer trade ties with others (eg, China-EU, RCEP in Asia). The US's perceived unreliability in trade partnerships will lead to a loss of influence in setting global trade norms. We'll see a strengthening of trade blocs that exclude the US (CPTPP after US withdrawal from TPP).
5. Technological fragmentation: The US-China tech war has spurred dual systems in areas like semiconductors, 5G, and AI. We'll see long-term bifurcation in standards and ecosystems (Android vs HarmonyOS, US vs Chinese cloud services). We can expect strategic national investments in domestic tech industries (CHIPS Act, etc).
6. Strain on domestic industries: Some US industries (agriculture, automotive) will suffer from retaliatory tariffs. Government subsidies and bailouts will cushion the blow, but at a cost to taxpayers. Some sectors will adapt by finding new markets, while others will lose competitive edge globally.
7. Increased nationalism and populism in trade policy: The success of Trump's trade rhetoric has shifted the political center on trade. Even post-Trump administrations will become more skeptical of free trade. "Buy American" and reshoring policies may become permanent features of US economic policy.
8. Environmental and social implications: Localised production could lower some emissions from shipping, but less efficient manufacturing can offset this. Weakening global cooperation makes climate-related trade policies harder to implement.
So in brief, the long-term effects of the trade war sparked under Trump will include fractured global supply chains, weakened international trade rules, rising protectionism, and a shift toward economic nationalism. While some industries will adapt and new will alliances form, global trade will become more fragmented overall, less efficient, and more politicised, potentially slowing global economic growth and innovation significantly.