The American president is reaping the first fruits of his economic plan made up of tariffs and crossed vetoes. With stable inflation and a steady decline in the trade deficit, industry is now once again central.
The reason for what he is doing escapes European analysts Donald Trump because they have replaced the neutrality of observation with cheering in defense ofEU who does not want to be reflected in his own crisis. After Davos – where perhaps for the last time the World economic forum seeing as the boss of BlackRock Larry Finkmister 14 trillion dollars, wants to move it to Detroit – they have elected as their mentor Mark Carneythe Canadian leader who stated the obvious: the world order has changed and if you’re not at the table you’re on the menu. He could be answered with Trump: you don’t have the cards. The Canada it grows at European rates, therefore little, it has high unemployment, a trade balance of half a billion dollars and is structurally dependent on the American economy. Try flirting with Chinabut has a short leash compared to Washington.
EU, Mercosur and dependence on the USA
It’s the same attitude as Ursula von der Leyen which “offends” the European Parliament just to sign the Mercosur and runs in India to make an agreement to try to sell the German cars left on the yards following the Green deal. The EU is trying to free itself from the USA but today they have become our main supplier energy and he risks ending up like the hamster: he spins in the wheel without being able to get out. New Delhi is willing to grant a discount on duties to European cars from 110 to 40% immediately (and 10% in 5 years), but in exchange he wants free rein on everything else manufacturing. Doesn’t the Baroness know that India is growing six times faster thanEurozone.
Tariffs, Lincoln and the end of globalization
Everyone hopes that Trump has made a mistake, but the data – at least for now – proves him right. Also because what the man is saying Mar-a-Lago it’s nothing new. It’s the same theory as Abraham Lincoln when he had to face secession. He said, “We need a national bank, domestic production, and protection with high tariffs.” What had happened? The same error that Bill Clinton he committed 150 years later. Southern cotton mills were content to use slaves to sell to Great Britainimporting everything needed: the factories were on the other side of the Atlantic and the newborn American states were not growing. When Clinton – preceded by Romano Prodithen president of European Commission – opened the doors to China WTO without tariffs he imagined that Beijing would become the world’s factory dominated by the dollar. A quarter of a century later for the USA, but generally for the West, the result is disastrous. Therefore The Donald rediscovers Lincoln’s commandment and decrees: globalization is over.
Trumpnomics, rates and the Federal Reserve
Giving him “scientific” support is his first economic advisor Stephen Miran whom our economic gurus have christened “the monetary theorist of populism”. His idea is: high tariffs to force Americans to self-maderelease the dollar as a guarantee currency to prevent it from being artificially overvalued in order to export more, stimulate with low rates internal consumption. Hence Trump’s very harsh controversy against Jerome Powellpresident of Federal Reserveaccused of keeping the cost of money too high. Miran claims that it can be cut by 100 basis points, Powell fears the surge ininflation which for now is stuck at 2.7 percent and does not appear to have been affected by the duties.
The only ones keeping rates higher than necessary, or at least appropriate, remain the Germans that force the ECB led – so much so to say – by Christine Lagarde to stand at 2.15 percent against a Japan which is running at 0.75 and China which maintains 3 percent, but has cut by 100 percent in two years.
US industry against European stagnation
The USA emulates Big Wednesday to Huntington Beach they are surfing the wave of trumpnomics. Starting with the impact of duties. The Donald’s astonishing declarations give the impression that Americans pay disproportionate amounts of money for products that import. This is not the case: the average duty is 10 percent, certainly much more than the pre-Trump era when it was 2 percent, but it has only marginally affected consumption also because importers have cushioned at least half the impact. It should also be said that in the era of Joe Biden they weren’t much shorter. He maintained the tariffs imposed by the first Trump, adding other very selective ones. And Biden too, launching his Reduction Inflation Actattempted with financial stimuli to bring production back to America. The result is – as they testify in their War capitalism Alberto Saravalle And Carlo Stagnaro – that «from 2018 to 2024 the tariffs produced revenue of 233 billion for the American government». Furthermore, the EU, even if it woke up late, is now hitting China at Trump’s level with one difference: American factories have started working again, European ones are struggling.
Rust Belt, growth and midterms
The theme of internal production It’s a vice president’s thing JD Vance than in his Hillbilly Elegybenevolently translated into American elegytells of the desolation of Rust Beltthe “rust belt” with the factories of Detroitdel Midwest once incubators of the American dream and now abandoned due to the China effect. Today American industrial production has increased by 2 percent in one year with plants exploited at 76.3 percent. In the Eurozone, industrial production fell by 1.5 percent last year.
Trump’s detractors are rooting for things to go badly in America so that next November, in the Midtermsthe president is defeated. To the point that, following Emmanuel MacronEuropean leaders begin to preach about withdrawing European assets from the US. They risk doing the math badly – the Secretary of State for the Economy indirectly reminded them of this Scott Bessent – because 30 percent of financial investments in Europe are in US hands and any US retaliation would be disastrous.
US debt, payments and the American leash
Bessent has its own precise monetary strategy based however on the positive numbers ofreal economy: lower the cost of money in the USA with the president also asking for a cap on interest on credit cards: never again above 10 percent. It wants to achieve two effects. Stimulate domestic demand and cool the burden of enormous US public debt (38 thousand billion), bringing the yield of the ten-year bond below the European level.
Furthermore, the world depends on American payment systems and, if Trump decided to wage digital war by pulling the plug, Europe would be helpless. In Brussels as in the other chancelleries of the Old Continent – but Carney, the new idol of Trumpian antipathizers, also knows this – everyone is aware that the American leash is short between energy and technology.
IMF data, deficit and global poker
Furthermore, Bessent’s optimism is based on some solid numbers. US growth is estimated by IMF at 2.4 percent (the global one is 3.3) – in the Eurozone we are satisfied with half – and there are 164 million employed, equal to 47 percent of the population, while in Europe we do not reach 44 with around 198 million workers. But the latest data is surprising: the apparently whirlwind of tariffs has led America to lose 29.35 billion dollars in exports in just one year. trade deficit. From the port of Los Angelesthe largest in the United States, sends out more goods than arrives. And then they say Donald is crazy. Maybe it’s true. Among his six commandments on how to do business he indicates the have fun like the fundamental one.
It’s true, it transformed former globalization into a table of poker where he bluffs constantly, but knows one thing that others underestimate: the crazyor the jokeris the card that means infinite multiplier. And he focuses on this.
