Trump’s commercial shock strikes the global economy

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Your guide to what the second period of Trump means to Washington, business and the world

Over the past two decades, the global economy has fallen from one shock to another: the financial crisis; Donald Trump’s first trade war on China; The epidemic. Postpartum enlargement; Russia’s invasion of Ukraine; War in the Middle East. And now, “Lets-THE-WORLD-ECONOMY-FOR-FUN” the trade war, which re-recovered the customs tariffs to the levels that have not been seen for more than a century, with more next “The mutual definitions“It is re -imposed. (See Plans.)

The mission of the International Monetary Fund is to understand what this unnecessary shock may mean for the global economy. In the latest Global economic outlookIt is better to do this. This does not mean that he knows. No one does. In addition to the fragility that penetrated due to the previous turmoil and the usual ignorance of how our global global economy works, we all face the extreme difficulty that we have no idea what Trump will do then, or in this matter, how others will act in the response.

As a result, the biggest fact we can define, regardless of the high definitions imposed by the United States and China on each other, is the high uncertainty. This is the same economically paralysis. In fact, one of the many frustrated facts in the Trump administration is its failure to understand that it is in a free society, it can be said that it is the most important role of the government is Reduce Understanding, do not do everything in his power to raise it.

Consider the background of Trump’s shock. Pierre Olivier Gurinchas, the Fund’s Economic Adviser, also notes in an introduction to WeO: “The global economy has shown surprising flexibility during severe shocks in the past four years.” The inflation decreased from its highest levels. Unemployment rates and vacancies are also returned to prenatal levels. Global growth has returned to about 3 percent, less than it was in the past, but at least respectable, while production approached the capabilities. However, many economies have also remained less than prenatal trends. The United States was the biggest exception in the upward trend.

Things were improving after that, but there was also a great fragility. In many countries, inflation is no longer safe. Public debt levels and their inability to generally are in high levels, largely as a result of the efforts made to expand previous shocks. Useful interest rates are also at high levels. Thus, it is much difficult to use the financial or monetary policy for the pillow’s strikes today. No wondering to reduce growth expectations. No wonder, too, Trump wins war on Jay Powell in the Federal Reserve. The latter is right to resistance. I remember how inflation courses in the seventies were confidence. We do not need to be repeated in our fragile global economy.

The International Monetary Fund also explains how sharp definitions such as shocking the width work on those who impose it, which reduces productivity and increases the costs of unity. They face a negative demand shock as the demand for export decreases, which leads to low prices on prices. As weo says: “In both cases, the incremunition adds a layer of trauma of demand as companies and families respond by postponing investment and spending, and this effect may be enlarged due to the most tight financial conditions and increased exchange rate fluctuations.”

WeO reference expectations are based on the measures announced as of April 4. And remember that “global growth is expected to decrease in light of this option from 3.3 percent in 2024 to 2.8 percent in 2025, before recovery to 3 percent in 2026.

This expectation is deleted the effect of changes since April 4. On April 9, for example, Trump put a 90 -day stand on high tariff rates on many countries. At the same time, the customs tariffs were increased on Chinese goods, while the minimum remained 10 percent over all countries. China faced again. Two days later, the United States said it would excuse many electronic devices. China raised the customs tariff on American goods again on April 12. Then, from April 14-the report mentioned in the report-“the rate of effective tariffs in the United States on Chinese goods was 115 percent, while China on American goods was 146 percent, and the US tariff rate in general in general was approximately 25 percent, from 3 percent in January 2025.”

In short, it is a global economy that faces tremendous risks on the downside: deciphering the brutal transparency of the great powers; Pressure from both the United States and China to choose between them; A severe loss of confidence in the United States, confidence, good feeling and trips from the dollar; Financial and financial crises; Financial and economic turmoil in emerging and developing countries in a world with official assistance that is quickly decreased; Deep economic and humanitarian crises; Social and political instability exacerbated; And even the major wars.

Of course, the Fund cannot explore the geopolitical effects of the potential division of the integrated world that the United States has established itself over the past eight decades. But the question is whether the full range of these negative risks can be avoided. It indicates the possibility that the fear of the moment will lead to a return from the edge of the abyss and therefore imposing a new world order. It is possible, for example, that China finally realizes that it cannot rely on global demand to withdraw its huge economy. If it finally turns into an economy led by local demand, it can at least reduce the global crisis. It is also possible for the United States to abandon its unidentified nostalgia for the manufacturing economy will never return, and thus turns towards more commercial policies – in fact, SANER.

I am no Battering. But I can hope. We cannot remain on the path of an economic and political catastrophe.

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