When Donald Trump announced his so-called Liberation Day tariffs on just about every country on earth, while excepting Russia, of course, I asked an eminent economist how bad the damage would be.
asserted
damage → announce → economist
Warwick McKibbin told me that it certainly wouldn’t be helpful because it’d increase global inflation.
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it → tell → inflation
Which everyone except Trump seemed to understand.
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everyone → seem → Trump
But it wouldn’t be calamitous for the world economy, said McKibbin, a former Reserve Bank board member and ANU professor.
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McKibbin → say → economy
Because Trump’s domineering share of global news noise is not matched by America’s material heft in the world economy.
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share → match → economy
The US accounted for only 15 per cent of global trade; the other 85 per cent would simply restructure itself around the US, McKibbin predicted.
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McKibbin → account → US
It’s happening.
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It → happen → ?
For example, Canada, suffering brutal trade hostility from Trump, is pressing the European Union for much deeper economic ties.
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Canada → suffer → ties
Prime Minister Mark Carney is building Canada’s post-American future.
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Carney → build → future
The Europeans are open to the idea, according to a weekend report by The Wall Street Journal.
uncertain
Europeans → accord → Journal
Australia concluded a hard-won trade deal with the EU just six months ago.
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Australia → conclude → EU
It’s so fresh that it hasn’t yet been ratified.
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it → ’ → ?
Use of that regional name would remain restricted to French producers and not every trade barrier would be dismantled.
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barrier → remain → producers
Australian makers would become the only ones in the world outside Italy to be permitted to use the sweet sparkling name.
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makers → become → name
And it would abolish tariffs on 98 per cent of categories of Australian exports to the EU.
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it → abolish → EU
For Australian shoppers, European chocolate, wine and cars would become cheaper if the deal is ratified.
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deal → become → shoppers
Yet Canberra is following Carney’s progress closely.
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Canberra → follow → progress
“We are on the same page,” Australia’s trade minister, Don Farrell, tells me.
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minister → tell → me
“We will take great interest in what Carney does.”
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Carney → take → what
The Canadian leader “has instructed his special envoy to Europe to scope out the most ambitious possibilities short of full membership in the EU or its common market”, the WSJ reported.
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WSJ → instruct → EU
“Wouldn’t it be lovely if Canada was the 28th state of the European Union rather than the 51st state of the United States?” posed Finnish President Alexander Stubb, an interlocutor of Carney’s.
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Stubb → pose → Carney
The Journal reported that the Canadian-EU talks so far encompass trade, investment, defence, scientific collaboration, joint satellite networks, preferential visa-free access and new fibre-optic underwater cables to connect Canada with the EU’s 27 member nations.
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talks → report → nations
Farrell says he’s open to all possibilities in potential new arrangements with the EU, with the exception of extra fibre-optic cables; it’d be a stretch.
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it → say → cables
“The world,” says Farrell, “is dividing into protectionists and free traders.
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Farrell → say → protectionists
It’s indisputable that Australian prosperity of the last 50 years has all been about our engagement with the world.”
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prosperity → ’ → world
Europe, like Canada, is attempting to develop greater independence from the US.
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Europe → attempt → US
Poland’s prime minister, Donald Tusk, captured the EU’s vulnerability last year when he said it was an absurdity that “500 million Europeans are asking 300 million Americans to defend them against 140 million Russians”.
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Europeans → capture → Russians
It’s smaller than America’s but, at $US23 trillion ($32.3 trillion) annually, bigger than China’s.
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It → ’ → China
It’s not that Trump’s tariffs have devastated Australian trade.
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tariffs → ’ → trade
Although the American president put 50 per cent tariffs on Australian steel and aluminium and 12.5 per cent on just about everything else, Australian exports to the US have flourished.
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exports → put → US
Farrell calls it a paradox.
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Farrell → call → it
The value of all Australia’s exports to the US has surged by 67 per cent in the year and a half since Trump’s Liberation Day.
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value → surge → Day
The paradox is explained by two factors.
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paradox → explain → factors
One is that Trump put even higher tariffs on most of Australia’s competitors in the US market.
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Trump → put → market
These three enjoy tariff-free access to the US market.
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three → enjoy → market
Incidentally, the stated objective of Trump’s tariffs was to reduce the US trade deficit.
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objective → state → deficit
The world has been “raping” America for decades, he thundered.
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he → rap → decades
For all the damage he’s done to America’s alliances around the world, he’s made no meaningful difference to its trade deficit.
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he → do → deficit
Nonetheless, we shouldn’t expect that the next president magically will waive the tariffs.
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president → expect → tariffs
Farrell points out that, when Trump was replaced by the Democrat Joe Biden in 2020, Biden kept the Trump tariffs in place.
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Biden → point → place
…and 18 more, not listed.
