The tariff war unleashed by US President Donald Trump on a range of products – including aluminum, steel and copper – targeting Canada, Mexico, Europe and China in particular, is rattling the global econ-omy and governments. Countermeasures are being taken by various countries, including the EU as a whole. Contacted by SIR, economist Riccardo Moro, professor of Development Policy at the Univer-sity of Milan (in the year 2000, director of the Italian Bishops’ Conference Foundation, which was in-volved in the debt relief operation for two African countries), explains the implications for the global economy and in particular for the less developed Global South. “All indicators suggest that we are heading for an economic crisis,” he warns. “Should this happen, aggregate demand in general, global demand, will decline, which will also affect the Global South because their sales will fall. Should there be widespread inflation, imports for these countries will become more expensive.”
What could be the global effects of the US tariffs?
it is hard to make forecasts and predict exactly what will happen because of the constant announce-ments followed by partial or total retractions. In general
there is a risk of a global trade war, the first result of which would certainly be inflation.
Inflation causes high interest rates because the central banks try to counteract inflation.
This de facto results in a downturn of the economy, which causes unemployment and affects the volume of business.
Trump’s idea of attracting manufacturing to the United States. He makes bombastic declarations but in fact the only sensible thing he could do is to persuade companies that have relocated their manufactur-ing to start producing in the United States, thereby increasing domestic employment, thus reinstating the working classes and creating a wedge between the economically privileged middle class and the working classes. This is because employment opportunities for less qualified roles decrease with the gradual relocation of industrial activities, roles that correspond to the very Trump voters who com-plained about inflation under the Biden administration. In all honesty, it is very difficult to predict whether this objective will be achieved. Should it be achieved, it will be in the medium term, certainly not in the short term. This leads to
a more severe economic downturn that will affect everyone. And monetary policies aimed at curbing inflation risk exacerbating the crises.
What are the implications for trade and geopolitical dynamics?
Trade alliances and geopolitical balances may change. The United States may no longer be indispensable. There is nothing in the United States that other countries do not have, in terms of production, information technology, technological research and social networks. The fact that China has developed its own artificial intelligence shows that there is no cultural, scientific or technological monopoly in any sector. As a result, at some point other countries will ask: do we really need the United States? China is the country that will benefit from this situation because of its low-cost, high-tech production. No wonder a conservative, neo-liberal newspaper like the Wall Street Journal recently said that this policy makes no sense.
What impact could this new US policy have on the less developed countries of the southern hemisphere?
Trade relations between the United States and Latin America have traditionally been important. How-ever, other countries in the southern hemisphere are not as dependent on the US. The biggest impact will be felt when US humanitarian aid stops flowing.
As a result of this decision, the whole of Africa is now looking to China.
Many African countries have approached Chinese embassies to see if they can help provide the re-sources previously supplied by the United States. China – which never gives a transparent answer – did-n’t say no outright. Moreover, the Global South’s exports to the United States are rather small, despite the vast quantities of raw materials it possesses. Africa’s most important export in recent years has probably been the sale of minerals, mainly to China, whose manufacturing industry has the capacity to process these minerals. It is foreseeable that countries in the global South will increasingly look to China for commercial and political partnerships.
We are facing an incomprehensible race to weaken and isolate the United States.
Another consideration is that tariffs threaten industrial investment, which develops when there is a rea-sonable degree of certainty about the future. If a businessman doesn’t know what prices he will be able to sell at tomorrow, nor his economic returns, a climate of mistrust will develop, leading to a reduced willingness to invest in the United States.
But Africa has rare earths, oil…
The United States and Trump certainly have an interest in rare earths and in understanding the dynamics of non-traditional markets. We don’t know exactly what they’re doing in Africa. But it seems difficult to imagine that they will be able to find large quantities of rare earths once USAID’s resources are depleted.
Is there a strategy behind these decisions?
It’s hard to say, although it seems unlikely. On a personal level, I find leaders like Trump and Musk, who are clearly borderline personalities, rather frightening. Elon Musk’s autobiography suggests that he has a massive inferiority complex and an insatiable desire to prove himself to his authoritarian father. He craves validation in all areas of life, has a total disregard for the truth, and is utterly contemptuous of it. He is not pursuing a political strategy, but a form of personal delirium. Trump can be likened to the bully on the block, who invites Zelensky to his house and then insults him in front of the cameras. I find this extremely worrying. He doesn’t seem to have a strategy for government, and it’s not clear if someone is pulling the strings behind the scenes. At times, it seems like we’ve landed in the sci-fi film “Idiocracy,” where corruption and the cultural degradation of people turn everyone into a horde of morons.
