What the US could lose from Trump's trade wars — analysts' answer
news.online.ua
Sat, 12 Apr 2025 22:04:00 +0300
What the US is losing from Trumps trade warsRecently, investors have begun to massively dump the dollar its exchange rate has fallen by about 8 since Trumps inauguration and US Treasury bonds the yield on 10year notes has exceeded 4.5, demonstrating what the world could be like if the US continues to retreat from its global leadership role, which it has played for the past 80 years, ensuring stability and prosperity.
At the same time, Trump reportedly continues to insist that the rest of the world is robbing the United States, despite a 90day pause in imposing new tariffs on all countries except China.
He portrays partners in Europe and Asia as parasites who have lived at Americas expense for decades.
As evidence, he cites the US trade deficit, which amounted to 918 billion last year.
At the same time, the US president greatly exaggerates the deficit with China, claiming that it is three times larger than the real one.Trump has also repeatedly stated that Europe does not buy anything from the United States at all although in fact the European Union purchased 649 billion worth of goods and services from America in 2024 alone.However, it also states that a certain unfairness in global trade still exists it is often easier for other countries to sell goods in the United States than for American companies to sell abroad.
But this is no reason to dismantle the global trading system, which, by and large, benefits the United States enormously.
If America abandons its tolerance for small distortions, it will lose significant influence over that system.
In addition, it is specified that over the halfcentury of trade deficit, the US economy has quadrupled adjusted for inflation.
The journalists note that it is impossible to estimate in monetary terms how much the US could lose by giving up its leading position.Trumps advisers argue that the dollar should be weaker to boost exports and reduce the trade deficit.
But the dollars role as the worlds reserve currency brings dividends that far outweigh the potential costs of its high value.
Nearly 60 of the worlds foreign exchange reserves are held in dollars 64 of global debt is denominated in dollars 54 of foreign trade contracts are concluded in dollars.This means that other countries are effectively financing U.S.
debt, which lowers the cost of borrowing and debt service for the U.S.
government and for American consumers.
It also helps keep prices of imported goods stable and reduces the risk of a currency crisis in the United States.Historically, if a countrys economic influence decreases, its military power also weakens due to a lack of defense finances.Now, Trump is putting all the benefits of American leadership into question.
He is dismantling Americas primacy in world trade and avoiding protecting allies.
If he continues in this vein, the United States risks losing more power and influence than anyone can imagine.
And the world will become less safe.
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