Tariff troubles 2.0

'What's about to hit the world?', The Economist magazine's headline captures the fear and uncertainty over Donald Trump's second US presidency and how he could reshape the world order. Trump has publicly committed himself to tax cuts, mass deportations of millions of illegal migrants and blanket tariffs on imports into the US from Canada, Mexico and of course, China. Hefty tariffs of the sort he has proposed could invite retaliation. If that happens, the worst global trade wars since the 1930s could get triggered. China and many European countries have already readied lists of American goods on which they would impose retaliatory tariffs. China may be planning to go after US companies. For instance, an antitrust investigation has been initiated into American chipmaker Nvidia over potential anti-monopoly violations. What does Trump really want? Trump wants to re-industrialise the US so that the wages of the American middle class, which have long been stagnant, can rise. To do this, the Trump administration will have to secure the US economy against the coming China Shock. What does the red dragon have up its sleeve? As it tries to shore up its troubled economy, China could flood the global economy with its cost-competitive goods, wiping out industries in other countries. China, the factory of the world, produces more than a third of the world's manufactured output, and now this dominance is set to rise as Xi Jinping tries to do two things. First, he wants to establish China as the world's new technology leader, and Beijing is investing heavily in

This article was originally published on January 01, 2025.