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Yahoo
2 days ago
- Business
- Yahoo
Opinion - Trump is forcing US allies to cobble together a post-America world order
As President Trump and his allies dismantle the global system America once championed, the rest of the world faces a choice: either brace for chaos and kiss the ring, or forge, at least temporarily, a new order that promotes democratic principles but largely excludes the U.S. while leaving the door open for a future, less-bullying America to return. This would have been unthinkable not long ago. But Trumpism's assault on two essential pillars of the postwar global consensus — multilateralism and liberal democracy — is making it necessary. These pillars helped expand prosperity, reduce war, and uplift billions. They were indispensable in facing challenges like pandemics, cyberterrorism, and climate change. Trump and his imitators seek to replace them with something cruder, based on the reasoning that America is the strongest: economic nationalism and elected autocracy, with each country fending for itself and every man for himself. Multilateralism means sovereign nations working together, within rules-based institutions, to address problems. Trump has rejected this outright. His administration undermined the World Trade Organization, the United Nations, the Paris Climate Agreement, and NATO, the very embodiment of the alliance — not to mention the World Health Organization, from which he withdrew against all logic. Though the U.S. dominates NATO militarily, it contributes just 16 percent of the common budget — about the same per capita as Germany — and does not unilaterally control the alliance. This has irked Trump, who has declared NATO 'obsolete,' lied about the U.S. share and shown disdain for its collective commitments. With respect to world trade, Trump's tariff war rests on the notion that imports are somehow inherently harmful. The Peterson Institute for International Economics estimated his tariffs on China, Canada, and Mexico would cost the average U.S. household over $1,200 per year. Historically, tariffs have caused major damage. The Smoot-Hawley Tariff Act of 1930 worsened the Great Depression by triggering retaliation. Only after World War II, with the General Agreement on Tariffs and Trade and later the World Trade Organization, did global trade recover. Today, international trade exceeds $25 trillion annually and average tariffs are down to 2.5 percent. Trump's unilateralism has threatened all this. These global institutions are part of a bulwark against a return to nationalist chaos. They were created after World War II to prevent World War III. One should recall the maxim about forgetting the lessons of history. Trumpism also redefines democracy as a contest of popularity: You win an election, and you rule without constraint. It dismisses civil liberties, judicial independence, and press freedom. This mirrors the ideologies of Viktor Orban in Hungary, Recep Tayyip Erdogan in Turkey, Narendra Modi in India, the Law and Justice Party in Poland, and increasingly, Benjamin Netanyahu in Israel. According to Freedom House — which Trump has undercut by slashing foreign aid — 2024 marked the 19th consecutive year of democratic decline, with rights worsening in 60 countries. This worldview sees rules as weakness and ideals as naïveté. Trump's America doesn't want to lead the world — it wants to dominate or isolate from it. That's a dereliction of the American role in promoting liberty and truth. The appeal of illiberalism is no mystery. Across the world, fascist forces have weaponized wedge issues amplified by social media and simplistic populism. Immigration, for instance, is both an economic necessity and a cultural flashpoint. Progressive overreach, inequality, and instability have fed public anger. But liberal democrats have failed to explain how autocrats actually harm the very people they rally. If Trump's America walks away from its postwar responsibilities, the world should call his bluff. Done wisely, this could help Americans recognize the strategic failures of the populist right. Trump's global strategy involves supporting anti-democratic takeovers around the world. Now, core NATO countries are boosting defense spending and cooperation, anticipating that U.S. leadership can no longer be counted on. If Trump pulls out, a new alliance may emerge. But other possibilities — economic and political — are just as vital. One idea is a broad, low-tariff economic bloc of countries committed to not weaponizing trade. They could cap tariffs at 10 percent, resolve disputes through arbitration, and signal that interdependence still matters. This bloc wouldn't need to exclude non-democracies. It might include the EU, UK, Japan, Canada, Mexico, Chile — even China or India, if they play by the rules. When Trump abandoned the Trans-Pacific Partnership, its remaining members formed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, now covering 15 percent of global GDP. Although the U.S. alone accounts for about 10 percent of global exports and 13 percent of imports, it is not irreplaceable. A united bloc would render bilateral extortion tactics ineffective. The message: we will not be divided and conquered. Another option is an alliance of liberal democracies committed not just to trade, but to civil liberties, press freedom, and minority rights. Think of it as an expanded EU — or what America used to represent. This would exclude countries like Hungary, Turkey, India, and Israel under its current coalition — and possibly also the U.S. under Trump. The alliance could support election security, regulate social media, encourage academic exchanges, and promote joint infrastructure and cybersecurity. It would be a sanctuary for truth in an age of disinformation. It would affirm that democracy is about values, not just elections — and that those values lead to prosperity and legitimacy. This is the fight we are in. If clarity requires sidelining the U.S. for now, so be it. Dan Perry is the former Cairo-based Middle East editor and London-based Europe-Africa editor of the Associated Press, former chairman of the Foreign Press Association in Jerusalem, and the author of two books. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
3 days ago
- Business
- The Hill
Trump is forcing US allies to cobble together a post-America world order
As President Trump and his allies dismantle the global system America once championed, the rest of the world faces a choice: either brace for chaos and kiss the ring, or forge, at least temporarily, a new order that promotes democratic principles but largely excludes the U.S. while leaving the door open for a future, less-bullying America to return. This would have been unthinkable not long ago. But Trumpism's assault on two essential pillars of the postwar global consensus — multilateralism and liberal democracy — is making it necessary. These pillars helped expand prosperity, reduce war, and uplift billions. They were indispensable in facing challenges like pandemics, cyberterrorism, and climate change. Trump and his imitators seek to replace them with something cruder, based on the reasoning that America is the strongest: economic nationalism and elected autocracy, with each country fending for itself and every man for himself. Multilateralism means sovereign nations working together, within rules-based institutions, to address problems. Trump has rejected this outright. His administration undermined the World Trade Organization, the United Nations, the Paris Climate Agreement, and NATO, the very embodiment of the alliance — not to mention the World Health Organization, from which he withdrew against all logic. Though the U.S. dominates NATO militarily, it contributes just 16 percent of the common budget — about the same per capita as Germany — and does not unilaterally control the alliance. This has irked Trump, who has declared NATO 'obsolete,' lied about the U.S. share and shown disdain for its collective commitments. With respect to world trade, Trump's tariff war rests on the notion that imports are somehow inherently harmful. The Peterson Institute for International Economics estimated his tariffs on China, Canada, and Mexico would cost the average U.S. household over $1,200 per year. Historically, tariffs have caused major damage. The Smoot-Hawley Tariff Act of 1930 worsened the Great Depression by triggering retaliation. Only after World War II, with the General Agreement on Tariffs and Trade and later the World Trade Organization, did global trade recover. Today, international trade exceeds $25 trillion annually and average tariffs are down to 2.5 percent. Trump's unilateralism has threatened all this. These global institutions are part of a bulwark against a return to nationalist chaos. They were created after World War II to prevent World War III. One should recall the maxim about forgetting the lessons of history. Trumpism also redefines democracy as a contest of popularity: You win an election, and you rule without constraint. It dismisses civil liberties, judicial independence, and press freedom. This mirrors the ideologies of Viktor Orban in Hungary, Recep Tayyip Erdogan in Turkey, Narendra Modi in India, the Law and Justice Party in Poland, and increasingly, Benjamin Netanyahu in Israel. According to Freedom House — which Trump has undercut by slashing foreign aid — 2024 marked the 19th consecutive year of democratic decline, with rights worsening in 60 countries. This worldview sees rules as weakness and ideals as naïveté. Trump's America doesn't want to lead the world — it wants to dominate or isolate from it. That's a dereliction of the American role in promoting liberty and truth. The appeal of illiberalism is no mystery. Across the world, fascist forces have weaponized wedge issues amplified by social media and simplistic populism. Immigration, for instance, is both an economic necessity and a cultural flashpoint. Progressive overreach, inequality, and instability have fed public anger. But liberal democrats have failed to explain how autocrats actually harm the very people they rally. If Trump's America walks away from its postwar responsibilities, the world should call his bluff. Done wisely, this could help Americans recognize the strategic failures of the populist right. Trump's global strategy involves supporting anti-democratic takeovers around the world. Now, core NATO countries are boosting defense spending and cooperation, anticipating that U.S. leadership can no longer be counted on. If Trump pulls out, a new alliance may emerge. But other possibilities — economic and political — are just as vital. One idea is a broad, low-tariff economic bloc of countries committed to not weaponizing trade. They could cap tariffs at 10 percent, resolve disputes through arbitration, and signal that interdependence still matters. This bloc wouldn't need to exclude non-democracies. It might include the EU, UK, Japan, Canada, Mexico, Chile — even China or India, if they play by the rules. When Trump abandoned the Trans-Pacific Partnership, its remaining members formed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, now covering 15 percent of global GDP. Although the U.S. alone accounts for about 10 percent of global exports and 13 percent of imports, it is not irreplaceable. A united bloc would render bilateral extortion tactics ineffective. The message: we will not be divided and conquered. Another option is an alliance of liberal democracies committed not just to trade, but to civil liberties, press freedom, and minority rights. Think of it as an expanded EU — or what America used to represent. This would exclude countries like Hungary, Turkey, India, and Israel under its current coalition — and possibly also the U.S. under Trump. The alliance could support election security, regulate social media, encourage academic exchanges, and promote joint infrastructure and cybersecurity. It would be a sanctuary for truth in an age of disinformation. It would affirm that democracy is about values, not just elections — and that those values lead to prosperity and legitimacy. This is the fight we are in. If clarity requires sidelining the U.S. for now, so be it. Dan Perry is the former Cairo-based Middle East editor and London-based Europe-Africa editor of the Associated Press, former chairman of the Foreign Press Association in Jerusalem, and the author of two books.
Business Times
16-05-2025
- Business
- Business Times
The indirect impact of Trump's tariff war
[MILAN] An overwhelming majority of economists are convinced that, contrary to what US President Donald Trump apparently believes, tariffs cannot mitigate a current-account deficit. But there is little recent evidence for this position, for the simple reason that tariffs have been running at very low levels globally, with most developed economies maintaining average tariff rates in the low single digits. So, what explains the consensus? For starters, high tariffs did prevail during the interwar period, in the 1920s and 1930s, and there was no evidence that tariffs improved a country's current account. The US was running a trade surplus when president Herbert Hoover enacted the infamous Smoot-Hawley Tariff Act of 1930. While global trade subsequently plummeted, America's trade balance did not improve. But even without first-hand evidence of the impact of high tariffs on current-account balances, economists can reach credible conclusions, because we know what determines those balances: the difference between an economy's aggregate savings and investment. In the US, the national savings rate amounts to 17 per cent of gross domestic product. In the European Union, that rate is about seven percentage points higher, at 24 per cent of GDP. Since these two continent-sized developed economies share very similar investment rates, the difference in savings is reflected almost directly in the current-account balance, with the US posting a deficit of nearly 4 per cent of GDP in 2024, and the EU achieving a surplus of 2.7 per cent of GDP. To be sure, the Trump administration's tariffs – particularly the 'reciprocal' tariffs that were announced on Apr 2, and 'paused' on Apr 9 – focus primarily on the balance of trade in goods, which is only one component of the current-account balance. But the other factors that influence the current account – the services balance and investment income – tend to be much smaller and more stable. In any case, two developments could cause a rapid improvement in an economy's current-account balance: a sharp increase in savings, or a significant decline in investment. Trump's tariffs could achieve this if they continue undermining confidence, especially if they induce a recession. Persistent uncertainty could undermine investment, and rising import prices could cause consumers to reduce their spending, pending more information about the cost and availability of goods. But that information will soon arrive – probably within a few months. After all, the Trump administration is already announcing trade deals – starting with an agreement with the United Kingdom, following only a few days of negotiations – and has temporarily suspended its massive tariffs on Chinese imports. Given Trump's voracious appetite for dealmaking and lack of commitment to delivering particularly radical results, many more trade agreements will likely be concluded before Trump's three-month suspension of his 'reciprocal' tariffs ends. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As policy uncertainty declines, the US will probably return to the low-savings, high-investment pattern of the past, especially given American firms' continued AI dominance. So, even if America's current-account balance improves temporarily, the overall deficit is likely to persist, as will the surpluses of other major economies, such as China, the EU and Japan. While Trump's tariffs will probably have little lasting impact on America's current-account balance, they can upend bilateral trade balances. We have seen this first-hand: since 2018, when Trump's first administration began imposing high tariffs on China, the country's share of US imports has fallen from over 21 per cent to about 14 per cent. Meanwhile, China's share of EU imports has risen slightly from its 2018 level of about 20 per cent. The narrowing in the US-China deficit might be enough for Trump, who is fixated on bilateral trade balances, making them the basis of his reciprocal-tariff calculations. The US-China trade talks just yielded a preliminary agreement that both countries will substantially reduce import tariffs, at least temporarily. Even so, US tariffs on Chinese goods will remain 30 per cent higher during the just-agreed 90-day 'pause' than they were at the start of the year. As a result, Chinese exports to the US are set to fall further, with Chinese producers diverting US-bound goods to other markets – especially the EU. But increased imports from China will not affect the balance of savings and investment in these markets, as they will be offset either by reduced imports from other countries or by higher exports, including to China, which will be importing less from the US. Meanwhile, the countries facing the lowest US tariffs will have higher bilateral trade surpluses with the US, while their trade balances with China and other countries deteriorate. So, a major reshuffling of bilateral trade balances is in the offing. This process will demand considerable flexibility from industry, which will have to adjust production to meet the needs of consumers in different markets. It will also require policymakers to resist the temptation to protect their domestic markets from 'surging' imports from countries such as China. These changes in bilateral trade flows between non-US markets constitute a more diffuse – and possibly greater – challenge to the global trading system than the direct impact of US tariffs. PROJECT SYNDICATE The writer is director of the Institute for European Policymaking at Bocconi University
Yahoo
13-05-2025
- Business
- Yahoo
Tariffs, trade and the road ahead: How 2025's protectionist shift is reshaping global trade finance
Although the current tariff environment presents immediate challenges, it also presents a chance to rethink traditional approaches to trade finance. Indeed, both businesses and financial institutions can build greater resilience against future disruptions by embracing digital transformation and developing more agile financial solutions. The road ahead may be uncertain, but the evolution of trade finance provides a roadmap for navigating protectionist waters. And the waters are getting murkier. At the start of April, the United States launched some of the most aggressive protectionist trade measures since the Smoot-Hawley Tariff Act of 1930. What began as campaign promises made in the run-up to the Presidential election last year has, within a few weeks, redrawn trade routes, upended pricing models, and forced businesses worldwide to reassess their cross-border strategies. The measures, which currently include a 25% tariff on imported vehicles, a baseline 10% levy on virtually all imports, and more punitive rates for dozens of 'non-cooperative' nations, have created immediate challenges for exporters worldwide. The important word here is currently, as the picture may well change again after President Trump's 90-day pause comes to an end. For British businesses, despite the UK's relatively favourable treatment compared to other G7 economies, the impact is already becoming apparent across multiple sectors. Companies are reporting disrupted supply chains, extended payment terms and increasing pressure on working capital; all of which has created a bottleneck of challenges demanding innovative financial solutions. The automotive, aerospace and pharmaceutical sectors – cornerstones of British manufacturing – stand particularly exposed to the new US tariff regime. UK steel exporters, which send approximately 200,000 tonnes worth over £400 million annually to the US, now face a stark 25% import tax that cancels out previous quota arrangements and exemptions. This comes at a particularly challenging time with the sector already on the brink – so much so that Parliament recently held an emergency session to secure the future of British Steel. Meanwhile, Northern Ireland-based businesses find themselves in a unique position, navigating both UK and EU trade regimes. Whilst this dual status creates opportunities to reroute trade and potentially attract investment amid US tariff disruptions, it also introduces additional complexity, as firms must navigate two regulatory frameworks while managing cross-border risks. Regardless of what sector or part of the country they are in, however, there are practical implications for all UK businesses. Companies throughout the supply chain are reporting increased costs, extended payment terms, and greater uncertainty. UK Export Finance (UKEF) has acknowledged the unprecedented challenge posed by Trump's rapidly shifting tariff policies, which make it difficult to estimate how many UK businesses could be at risk. There are also indirect impacts for companies relying on global supply chains passing through the EU, China, and the US, with suppliers raising prices on parts and raw materials to recoup higher tariffs elsewhere. As payment cycles extend and uncertainty increases, businesses find themselves with compressed working capital and greater exposure to cross-border risks. In this challenging environment, trade finance has demonstrated its capacity to adapt to economic and geopolitical uncertainty. Rather than breaking under tariff increases, trade finance has bent – continuing to grow in most parts of the world going through periods of market turbulence. Take supply chain finance (SCF) programmes, for example. They enable buyers to extend payment terms while allowing suppliers to receive early payments, which enhances working capital for both parties in the transaction. This is particularly valuable as businesses face tariff-related delays and renegotiate contracts. Likewise, receivables programmes allow businesses to convert outstanding invoices into immediate cash, offering greater financial flexibility to navigate volatile markets. The digitisation of trade finance processes further enhances these tools' effectiveness. By streamlining traditionally paper-based processes, businesses can access working capital solutions more rapidly and efficiently. Advanced platforms, like LiquidX provide real-time position visibility – this allows banks and asset managers to track counterparty exposure, monitor credit limit utilisation, and anticipate scheduled payments, which are all critical capabilities when navigating disrupted supply chains. Automated reconciliation systems also address the heightened complexity of cross-border transactions in an environment of shifting tariffs. These systems can process payments across multiple jurisdictions while maintaining visibility throughout the transaction lifecycle, thereby reducing operational risk at a time when margins for error are increasingly thin. Right now, financial institutions have an opportunity to provide much-needed liquidity and flexibility as businesses pivot their operations, renegotiate contracts, and explore new markets. Ministers recently announced an extra £20 billion of financing through UKEF, including state-backed loan programmes designed to encourage banks to keep lending to businesses impacted by tariffs. With this in mind, the banks and financial services providers that can offer comprehensive solutions spanning supply chain finance, receivables programmes, and working capital optimisation will be the ones that emerge as crucial partners. These institutions can help businesses not only manage immediate cash flow disruptions but also mitigate payment and delivery risks across increasingly complex supply chains. Looking ahead to the next five years, the trade finance market is set to grow significantly. As trade routes shift and protectionist measures proliferate, businesses will increasingly turn to financial institutions that can provide both the liquidity and the cross-border expertise necessary to navigate changing landscapes. Dominic Capolongo is Chief Revenue Officer of LiquidX, a leading, award-winning SaaS FinTech in the trade finance sector "Tariffs, trade and the road ahead: How 2025's protectionist shift is reshaping global trade finance" was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
30-04-2025
- Business
- Forbes
How April 2025 Redefined Portfolio Risk
April 2025 emerged as a pivotal moment for financial markets, fundamentally reshaping how investors perceive and manage portfolio risk. Marked by unprecedented policy shifts, soaring volatility, and a rare synchronized plunge in stocks and bonds, the month rivaled the chaos of the 2008 Global Financial Crisis and the 2020 COVID-19 crash. From a historic VIX spike to gold's unexpected resilience, these events exposed vulnerabilities in traditional diversification strategies and hinted at a potential secular shift in global markets. Here's a detailed look at what unfolded, why it mattered, and how it redefined risk for investors moving forward. The turmoil began on April 2, 2025, dubbed 'Liberation Day,' when President Donald Trump unveiled an ambitious tariff plan with rates as high as 125% on imports from countries like China, as reported by The Associated Press. The proposal, one of the most aggressive trade policies since the Smoot-Hawley Tariff Act of 1930, promised to reshape global trade dynamics. Volatility surged as Wall Street's 'fear index,' the VIX, soared to levels unseen since the 2008 crisis and 2020 pandemic crash, according to Investopedia, peaking on April 8, 2025. The S&P 500 plummeted 18.9% from its February 2025 high by April 8, while the tech-heavy Nasdaq entered bear market territory, dropping 26.7% from its December 2024 peak by April 7. This rare breakdown in the negative correlation between equities and fixed income upended the risk-mitigation assumptions of diversified portfolios, leaving investors exposed to unprecedented losses. Compounding the challenge, bonds—typically a safe haven during equity market turmoil—failed to provide relief. The aggressive tariff plan fueled fears of inflation and reduced global demand for U.S. Treasuries, as foreign investors anticipated trade disruptions and higher borrowing costs. This drove yields on the 10-year Treasury note from 4.01% on April 4 to 4.48% by April 11, causing bond prices to plummet and eroding their role as a hedge, before yields settled at 4.23% by April 28. Why did bonds falter? Foreign governments and central banks, wary of U.S. economic nationalism, appeared to reassess their reliance on U.S. Treasuries. While foreign holdings of U.S. debt rose from $8.527 trillion in January 2025 to $8.817 trillion in February, according to U.S. Treasury Department data, some countries, like China and Russia, accelerated diversification into assets like gold, signaling caution. Amid the chaos, gold shone as a bright spot. Rallying since November 2024, the precious metal peaked at just over $3,500 on April 22. Driven by demand from institutional investors and central banks, gold's rally underscored its value as a non-correlated asset that thrives amid geopolitical and economic uncertainty. For portfolios battered by stock and bond losses, gold offered a critical hedge, highlighting its growing relevance in risk-conscious strategies. The events of April 2025 raise profound questions about the U.S. economy and its role in global markets. The synchronized decline in stocks and bonds has challenged the traditional 60/40 portfolio, forcing investors to rethink diversification. The possibility of reduced global reliance on U.S. assets, evidenced by central bank gold purchases, introduces risks to the dollar's status as the world's reserve currency. As markets head into the typically quieter summer months, uncertainty persists, with tariff implementation details, retaliatory trade measures, and Federal Reserve policy decisions poised to drive volatility. To navigate this new risk environment, investors should consider reallocating to assets less tied to U.S. markets, such as gold for its stability, commodities for inflation protection, or select emerging market equities in countries less exposed to tariff fallout. Hedging currency risk and prioritizing liquidity will also be key as global trade dynamics evolve. April 2025 will stand as a defining chapter in financial history, not only for its market turmoil but for its profound impact on portfolio risk management. The synchronized collapse of stocks and bonds, coupled with gold's rise and questions about the dollar's dominance, has upended conventional investment wisdom. As uncertainties linger—driven by trade policies, central bank maneuvers, and geopolitical shifts—investors must adapt to a new risk landscape. Diversifying into assets like gold, commodities, or select emerging markets, while closely tracking global developments, will be critical. Whether April's upheaval marks the dawn of a broader secular shift remains uncertain, but it has undeniably redefined how investors approach risk in an unpredictable world.
