Everyone will lose out from the trade war triggered by Donald Trump, but the United States will be the first to suffer, warned François Villeroy de Galhau, the governor of France's central bank, the Banque de France. In his annual letter to France's president, presented on Wednesday, April 9, he called for the government to better control public spending.
Does the trade war launched by Trump signal the end of globalization?
We are, in any case, experiencing a historic shift. The international order and alliances are being disrupted, mutually beneficial trade and global growth are under threat, and all of this increases economic uncertainty everywhere. These protectionist measures also signify the abandonment of American leadership and, no doubt, a return to economic isolationism. It is an unprecedented destruction of value on the part of a democratically elected leader. The global economy will suffer for it, everyone will lose out, but first and foremost the United States.
Why?
All analyses converge: These tariffs will both increase the cost of goods imported to the US, thereby re-starting inflation, and reduce growth there, by about one point of GDP, according to an average of economist's predictions. The New York Stock Exchange has already significantly dropped. It is unclear whether this will provoke a recession in the US, but the mere fact that some are mentioning the possibility was unimaginable three months ago. It is rare to see a US government score an own goal in such a way.
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