Trump's tariffs may split the world into 3 rival blocs — here's where each nation could land
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The Cost of Division: A $3.8 Trillion Hit to the Global Economy
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The world may be entering a new era of economic rivalry and it's one where each country might need to pick a side. US president Donald Trump's return to the White House has started a trade war because of his sweeing tariffs, which has led allies to question the United States role in the world, according to a Fortune report.While the US president has halted his highest tariff rates, but tariffs in some form will continue to remain and he even suggested that the United States might unilaterally impose tariffs as high as 70% in the coming days, as reported by Fortune.Economists at Wells Fargo came up with a hypothetical scenario where the world economy could soon be divided into three trading blocs led by the United States, China, and the European Union, reported Fortune. Even the European Commission President Ursula von der Leyen even said in April that, 'The West as we knew it no longer exists,' as quoted in the report.Wells Fargo pointed out that, 'Deglobalization has had its roots in the geopolitical and economic competition between the United States and China,' adding that, 'Recent events raise the possibility of further cleaving of the global economic order. Specifically, the possibility that the European Union goes in its own geopolitical and economic direction is no longer unfathomable,' as quoted by Fortune.ALSO READ: Flyers fume as Southwest Airlines shocks passengers with policy changes — key updates you need to know According to the Fortune report, the United States bloc would include most of the Western Hemisphere plus traditional allies in Asia and the Middle East. While China's bloc would include Russia, most of East Asia and Central Asia, the top economies in Africa, and also a few countries in Latin America and the Mideast, reported Fortune. The EU bloc will be the smallest group, which will comprise the European Union, the United Kingdom, Iceland, Norway, Switzerland, Turkey and Ukraine, as per the report.Wells Fargo analysed data of 100 countries that account for 97% of global GDP and 93% of global exports, then split them into the three blocs, according to Fortune. That calculation found that the US bloc had about half of global GDP in 2023, while the EU and China blocs each represented about a quarter of global GDP, as per the report.The global bank pointed out that in a tripolar world, each bloc would impose a 15% across-the-board tariff on the other blocs, as per Fortune report. Wells Fargo used the Oxford Global Economic Model to estimate that the global real GDP would grow 9.1% between 2025 and 2029, instead of the 11% rate under a baseline scenario where trade is essentially free, as reported by Fortune. That would mean that the world will miss out on roughly $3.8 trillion in GDP during that span, or about $1,800 for a typical household of four, according to the report.Wells Fargo said that, 'The growth-reducing effects of the levies are felt in the first two years after imposition, but the level of global GDP never returns to baseline, at least not during the forecast period we consider,' as quoted by Fortune.ALSO READ: Wolfspeed stock soars over 100% after shock CFO appointment — who is Gregor van Issum? United States, Japan, India, Brazil, Canada, South Korea, Mexico, Australia, Saudi Arabia, Argentina, Bahrain, Bangladesh, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, Gautemala, Honduras, Israel, Jamaica, Jordan, Kuwait, Morocco, New Zealand, Panama, Paraguay, Peru, Philippines, Qatar, Singapore, United Arab Emirates, and Uruguay, as reported by Fortune.European Union, United Kingdom, Iceland, Norway, Switzerland, Turkey, Ukraine, as per the report.China, Russia, Indonesia, Thailand, Vietnam, Malaysia, Afghanistan, Algeria, Armenia, Azerbaijan, Belarus, Bolivia, Cambodia, Iran, Kazakhstan, Kenya, Kyrgyzstan, Nicaragua, Nigeria, Oman, Pakistan, South Africa, Sri Lanka, Syria, Tajikistan, Tanzania, Tunisia, Turkmenistan, Uganda, Uzbekistar, Venezuela, and, Zimbabwe, according to Fortune.Not officially yet. But these developments suggest countries may start favoring trade with their bloc and limiting it with others.The US leads one bloc, China leads another, and the EU forms its own smaller but powerful group, as per the Fortune report.
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