Economists are mostly in agreement that President Donald Trump’s broad tariffs could potentially do irreparable harm to the U.S. in the long-term as global investors will now rethink their strategy of investing in the U.S. and potentially seek other markets that are more stable and predictable.
What made global investors bullish about investing in the U.S. is our country’s stability, certainty, and adherence to the rule of law. Whether the U.S. had a Democrat or Republican leader, investors could trust that the economy would remain stable enough that corporations would have time to adjust to a new administration’s economic policies and weather dramatic changes.
Economists say this is now in doubt. The unpredictability of Trump’s tariffs, green-lighting, red-lighting, even gas-lighting, coupled with Trump’s boldness to exact extreme measures – all of these are working to undermine the decades of trust our global investors have had in the U.S. market.
And contrary to Trump’s assertion that America will be better off in the future while his tariff adjustments sink in, experts are saying the so-called long-term benefits of his tariff wars are questionable.
Certain manufacturing is lost for a reason
Trump’ rationale, his endgame for the tariff war is to bring manufacturing back to the U.S. This is a noble goal, something that even Democrats after President Bill Clinton (who is largely responsible for pushing the U.S. into economic globalization) have tried to recapture.
But economic globalization wherein manufacturing is done in multiple countries before a final product is completed – is almost impossible to reverse because of cheaper labor and cheaper operational costs abroad. Capitalism is competition and capitalists will seek the highest profit even if it means going to another country.
Furthermore, other countries have developed the tech and know-how, as well as the fluidity to move products globally that makes the U.S. no longer the main and only source for massive market profit. On top of that, certain manufacturing left the U.S. in the first place because most Americans refuse to do tedious, low-paying work. There is also the consideration to factor in that heavy manufacturing is moving toward AI-Robotics which will negate the purpose of increased jobs in manufacturing.
Alienate our trading partners
Besides the U.S. losing our reputation as a stable market to invest, experts say the other major long-term damage – perhaps more damaging — is many of our trustworthy trading partners like Canada, Mexico, the EU, Japan, South Korea, ASEAN-nations are being pushed into the arms of China, our largest economic global competitors.
For example, for a very first time, Japan, South Korea and China are talking and working together to come up with an East-Asian response to Trump’s tariffs. Remember, Japan and South Korea have been at odds with China for decades. It’s also worth mentioning that Japan and South Korea are the last holdouts in Asia to open their markets in a massive way to China. The rest of Southeast Asia are already major economic partners with China. To top, ASEAN-nations have been prospering tremendously as they’ve shifted from the West to their natural (due to geography) trading partner, China.
The BRICS factor
One cannot ignore also that there is another colossal trading bloc globally in BRICS (Brazil, Russia, India, China, and new members Egypt, Ethiopia, Iran and the United Arab Emirates) that already represent roughly 45% of the world’s population and 35% of global GDP.
The EU, Canada and Mexico – our major trading partners (along with China) — are already trading partners with members of BRICS, a multi-country members organization with a shared vision to counter the U.S.’s economic hegemony. BRICS keeps growing each year and Trump’s tariffs could expand their market global share.
Beyond domestic inflationary concerns
For the most part, much of Americans’ angst and criticism aimed at Trump and his tariff hikes are over the increased cost it will have on imported products. Certainly, this is rightly the number one concern in the immediate short term. Poor and working-class Americans are already being stretched – many of them living on debt and cannot afford higher inflation. Middle-class Americans are concerned about their 401(k) and retirement portfolios deflating, triggering panic among retirees and near-retirees.
Many Americans voted for Trump to bring relief from the heavy burdens of high inflation and the high cost of essentials like grocery. Not only has Trump failed in alleviating these burdens, but his tariffs are making it worse to a point that economists and large banks are saying should we continue down this path, a recession is bound happen.
Already various industries face layoffs and factory closures due to increased costs and trade disruptions. Experts criticize the lack of a focused strategy. The irony is tariffs increase costs for U.S. manufacturers, complicating efforts to reshore manufacturing.
There is a palpable sense of fear among Americans over the economy. What’s upsetting is that much of this financial hardship and anxiety – which will get worse as soon as corporations begin to adjust to the tariffs – are self-induced, triggered by Trump, who must end this chaos before irreparable damage to our country sets in.
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