logo
Trump's tariffs may split the world into 3 rival blocs — here's where each nation could land

Trump's tariffs may split the world into 3 rival blocs — here's where each nation could land

Time of India2 days ago
Wells Fargo's Tripolar World Model
Live Events
The Cost of Division: A $3.8 Trillion Hit to the Global Economy
Three Competing Blocs: Who's Aligned with Whom?
US bloc
EU bloc
China bloc
FAQs
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
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.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Dollar catches breath, Brazil real slides on tariff threat; bitcoin near record high
Dollar catches breath, Brazil real slides on tariff threat; bitcoin near record high

Economic Times

time25 minutes ago

  • Economic Times

Dollar catches breath, Brazil real slides on tariff threat; bitcoin near record high

The U.S. dollar slipped further from a two-week high versus major peers on Thursday, as President Donald Trump's latest tariff salvos failed to shake markets, except in Brazil where a threatened 50% levy sent the real sliding as much as 2.8% overnight. ADVERTISEMENT The dollar felt additional weight from a sharp decline in U.S. Treasury yields following a strong auction of 10-year notes on Wednesday, tempering worries about the "Sell America" narrative that had seen Treasuries, the dollar and Wall Street stocks sold off in tandem earlier this year. Overall, investors were hungry for riskier assets with the most damaging tariff scenarios looking increasingly unlikely, helping Nvidia become the first stock ever with a $4 trillion valuation, and lifting cryptocurrency bitcoin to an all-time peak just shy of $112,000. Sentiment also drew support from minutes of the Federal Reserve's last meeting, with most policymakers of the opinion that interest rate cuts will be appropriate later this year. The dollar index, which measures the currency against six major peers, eased 0.1% to 97.286, extending a 0.2% decline from Wednesday, the same day that it pushed to the highest since June 25 at 97.837 before losing momentum. With the exception of Brazil, Trump's latest batch of letters to trade partners contained tariff rates close to those already proposed in his original "Liberation Day" announcement on April 2, as had been the case with other letters this week. ADVERTISEMENT Trump has also left the door open to extensions beyond the new August 1 deadline if countries make compelling proposals. Brazil had originally been slated for just the baseline 10% levy, but Trump cited not just trade practices but the treatment of its former president, Jair Bolsonaro. ADVERTISEMENT Bolsonaro, who was friendly with Trump when they were both in office, is on trial on charges of plotting a coup to stop current President Luiz Inacio Lula da Silva from taking office in January 2023. The real plunged as low as 5.6047 per dollar for the first time since June 6 overnight, and was last changing hands at 5.5826 per dollar. ADVERTISEMENT "It is a reminder of Trump's penchant for tariffs as a tool against a wide range of grievances, trade fairness or otherwise," Taylor Nugent, senior markets economist at National Australia Bank, wrote in a client note. While the latest batch of letters failed to move markets much outside of Brazil, Nugent said, "more interesting is the letters we haven't seen, with India, the EU, and Taiwan conspicuous examples." ADVERTISEMENT Trump and other officials have said several times lately that a deal with India is close, while the European Union is also edging toward a framework agreement. The euro gained 0.2% to $1.1747 on Thursday, while sterling added 0.2% to $1.3612. The dollar drooped 0.3% to 145.84 yen and fell 0.3% to 0.7922 Swiss franc. Bitcoin crept up 0.3% to around $111,114, inching back towards the all-time high hit overnight of $111,988.90. "The new record high came on improved risk sentiment," IG analyst Tony Sycamore wrote in a note to clients. "While the push to new highs hasn't yet sparked the fireworks the market might have been hoping for, there is scope for bitcoin to make further gains towards $120,000." (You can now subscribe to our ETMarkets WhatsApp channel)

‘Where did you learn English?': Trump's gaffe leaves president of English-speaking Liberia bemused
‘Where did you learn English?': Trump's gaffe leaves president of English-speaking Liberia bemused

First Post

time35 minutes ago

  • First Post

‘Where did you learn English?': Trump's gaffe leaves president of English-speaking Liberia bemused

US President Donald Trump made a goof after he praised the Liberian President for his English-speaking skills. Netizens were left in splits since English is the official language of Liberia read more US President Donald Trump indulged in yet another gaffe after he lauded the English of the president of Liberia, a country where English is the official language. On Wednesday, Trump was basking in the praise of a group of African leaders, right when Liberian President Joseph Boakai took the microphone. 'Liberia is a longtime friend of the United States, and we believe in your policy of making America great again,' President Joseph Boakai said in English at a White House meeting before advocating for US investment in his country. 'We just want to thank you so much for this opportunity," he added. STORY CONTINUES BELOW THIS AD Trump looked impressed by the Liberian president as he inquired where Boakai learned English from. 'Such good English, such beautiful …' Trump said. 'Where did you learn to speak so beautifully? Where were you educated?' Boakai was left amused by the assertion and chuckled since English is the official language of Liberia. 🚨BREAKING: In a completely embarrassing moment, Donald Trump told the Liberian President 'you speak such beautiful English…where did you learn to speak so beautifully' - even though English is the NATIONAL LANGUAGE OF LIBERIA. The world is watching America humiliate itself. 🤡 — CALL TO ACTIVISM (@CalltoActivism) July 9, 2025 When Trump pressed on his query, 'In Liberia?', Boakai simply answered: 'Yes, sir'. 'That's very interesting, that's beautiful English', Trump said. 'I have people at this table who can't speak nearly as well.' The video of the whole exchange went viral online, with people trolling Trump. Liberia, a colony for Black Americans It is pertinent to note that Liberia was founded back in 1822 as a colony for free Black Americans. At that time, it was seen as the brainchild of white Americans trying to address what they saw as a problem – the future for Black people in the US once slavery ended. While English is Liberia's first language, multiple Indigenous languages are spoken there as well. On Wednesday, Trump hosted the leaders from Gabon, Guinea-Bissau, Liberia, Mauritania and Senegal at the White House, insisting that he is shifting the American approach to the continent. STORY CONTINUES BELOW THIS AD During the meeting, Trump emphasised to the African leaders that the United States is a better partner to Africa than China. During the meeting at the White House, many of the African leaders spoke their own languages through interpreters. Trump maintained that his administration was committed to strengthening friendships in Africa, which he hoped to visit at some point. 'We're shifting from aid to trade,' he said at the start of a White House meeting. 'There's great economic potential in Africa, like few other places. In many ways, in the long run, this will be far more effective and sustainable and beneficial than anything else that we can be doing together.' Meanwhile, African leaders lauded Trump for brokering peace deals around the world and expressed support for his receiving a Nobel Peace Prize. 'We are not poor countries. We are rich countries when it comes to raw materials. But we need partners to support us and help us develop those resources,' said Brice Clotaire Oligui Nguema, president of Gabon. 'You are welcome to come and invest. Otherwise, other countries might come instead of you," he added. STORY CONTINUES BELOW THIS AD With inputs from Reuters.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store