Trump's Policies Set to Cost US Economy Dearly

Recently, an article pointed out that the Trump administration's recent radical policies towards the global trading system and strategic alliances are undermining the open trading system established under US leadership and will bring far - reaching and painful costs to the US economy. The following is a summary of the article:

The US has imposed a 25% tariff on goods from Canada and Mexico, and it is expected that EU goods exported to the US will also face high tariffs. This move indicates that the US is turning its back on the global trading system it helped create.

Morris Obstfeld, former chief economist of the International Monetary Fund, emphasized that the US trade deficit does not result from unfair practices of its trading partners. "Using tariffs to address the deficit is like squeezing an inflated balloon."

The US accuses the EU of being established to take advantage of the US. Danish economist Jesper Rangvid pointed out that the US only focuses on goods trade while ignoring service trade and capital gains. If the US's service trade surplus and capital gains with the eurozone are used to offset its goods trade deficit, the bilateral current account between the entire eurozone and the US is actually close to balance.

Exports to the US account for 27% and 21% of Mexico's and Canada's GDP in 2023 respectively. The US tariff hikes will bring huge economic costs to these two countries. For the EU, this proportion is only 2.9%, so the impact of the tariff hikes will not be as great. "But it is still an unfair and even ignorant act of economic warfare. The EU will have to retaliate, and trans - Atlantic relations will be permanently damaged."

The US is launching both economic and political attacks on its allies, which will surely lead to a backlash and ultimately "exact a painful price" from the US itself.