In that extreme event, then the global economy faces a blackout. Skittish oil prices will go through the roof, and the international economy will take a death-plunge. The US and its notorious addiction to cheap oil has the most to lose from such a crash.Even in the US, Trump’s hard-balling with China had rapid repercussions. Industries which are associated with Trump’s voter base are reeling over concerns about the impact of Chinese counter-measures.
By Finian Cunningham
US President Donald Trump, the 45th president of USA launched a trade war with China and, further, spooked global oil markets over his belligerent showdown with Iran.Given the dire financial repercussions for the US and, more generally, the international economy from Trump’s actions one wonders how he can ever claim to be such a business guru.
First on China, the Trump administration this week finally implemented its threats to raise punitive taxes on $34 billion-worth of Chinese exports. Trump is threatening to ramp up the tariffs on all Chinese traded goods to the US – some $450 billion-worth a year. Beijing condemned the “first shots” of the “biggest trade war in economic history”. It immediately hit back with equivalent reprisal tariffs on US exports.
Warnings from Beijing that “no-one wins in a trade war” reverberated with panicky losses across international markets, fearing that the escalating tensions between the world two largest economies will severely inflict collateral damage on the entire globe.
Even in the US, Trump’s hard-balling with China had rapid repercussions. Industries which are associated with Trump’s voter base are reeling over concerns about the impact of Chinese counter-measures.
In that extreme event, then the global economy faces a blackout. Skittish oil prices will go through the roof, and the international economy will take a death-plunge. The US and its notorious addiction to cheap oil has the most to lose from such a crash.Even in the US, Trump’s hard-balling with China had rapid repercussions. Industries which are associated with Trump’s voter base are reeling over concerns about the impact of Chinese counter-measures.
If the Trump administration goes the whole hog in its trade war with China, as it is belligerently claiming to do, then it is highly likely that the American economy, along with the rest of the world, will tank into recession.
The other big wake-up call about Trump’s thinking limitations is his detrimental showdown with Iran. The American president’s bullish demand that all nations cancel oil exports from Iran is sending market prices upwards.
Higher oil prices will, again, hamper the international economy and US growth in particular.The prospect can only get much worse if Trump persists in trying to isolate Iran – the world’s fourth biggest supplier of oil.
Iranian President Hassan Rouhani said that his nation is prepared to block off the Persian Gulf chokepoint for global oil trade if the US continues its plan to embargo all Iranian crude exports. Rouhani is referring to the Strait of Hormuz, the narrow stretch of water which links the Persian Gulf to the Gulf of Oman and thence the rest of the world.
Some one-third of all globally shipped oil passes through the Hormuz every day. Millions of barrels of crude from Saudi Arabia, Kuwait, Iraq and United Arab Emirates rely on the passage of giant tankers through the 20-mile strip at its narrowest. In a clear warning regarding US plans to cut Iran’s vital exports, Rouhani said the Hormuz was for the transit of “all oil or none”. Meaning Iran is not going to sit idly by and watch Trump reduce its oil exports to zero.
In that extreme event, then the global economy faces a blackout. Skittish oil prices will go through the roof, and the international economy will take a death-plunge. The US and its notorious addiction to cheap oil has the most to lose from such a crash.
Finian Cunningham has written extensively on international affairs, with articles published in several languages. He is a Master’s graduate in Agricultural Chemistry and worked as a scientific editor for the Royal Society of Chemistry, Cambridge, England, before pursuing a career in newspaper journalism. He is also a musician and songwriter. For nearly 20 years, he worked as an editor and writer in major news media organisations, including The Mirror, Irish Times and Independent.
This article was originally published by “Strategic Culture Foundation”
