Many countries would respond to Trump’s tariff hike with tit-for-tat trade restrictions. That would increase the cost of goods and services traded internationally, stoking inflation.
“I am a tariff man.” That’s how then US President Donald Trump described himself in 2018 after he’d slapped tariffs and other trade restrictions on many nations, sparking upheaval on financial markets and casting a shadow over global commerce.
ANU economics professor Warwick McKibbin, a globally renowned economic modeller who has analysed the likely effects of Trump’s economic plans, says his trade policies would be “devastating” for the world economy and Australia. Even if Australia could negotiate a reprieve from the direct 10 per cent tariff mooted by Trump, McKibbin warns we won’t be shielded from the global spillover from the inevitable trade conflict.
But tariffs hikes and trade wars are not the only economic policies being canvassed by Trump that pose a global threat. Economists are especially worried by his plans to deport millions of undocumented migrant workers from the US. That would slash the supply of labour in the US, pushing up wages and inflation.The independence of the US central bank may also be under threat should Trump win office.
“A return to Trumpian economic nationalism is not what the world needs,” he says. “Unfortunately, the world does not get a vote.”
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