EDITORIAL: Chinese President Xi has warned the incoming Trump administration that there will be no winners in a trade war while vowing to hit its growth targets for the year. Fear of a trade war with the US President-elect issuing multiple threats to specific trading partners are being seen as an extension of the policy of weaponising available economic tools, including the USD, to achieve foreign policy goals.
It is fairly evident by now that sanctions and delinking sanctioned countries from using the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system has led to an increasing number of countries opting to trade in currencies other than the US dollar with many no longer using the dollar as reserves.
Analysts argue that Trump’s strategy does not take account of global challenges that the country faces after four years of the Biden administration and is largely based on his personal experience as a real estate mogul and therefore not based on an empirical study.
They further contend that sanctions have not worked and as proof positive point to Russia’s growth rate of 3.6 percent in 2023, Iran’s 5 percent, China’s 5.3 percent, India’s 7.6 percent against US’ 2.5 percent, Germany’s negative 0.3 percent, France’s 0.7 percent and the UK’s 0.1 percent.
In addition, while sanctions have weakened US’s European partners (by detaching their erstwhile heavily dependent economies from cheap Russian fuel imports) while strengthening trading blocs particularly Brazil, Russia, India, China and South Africa (BRICS), which has expanded to 10 full members, including Iran and the United Arab Emirates with a trade corridor, supply chain, established between these countries.
The era of globalisation is slowly ending, which was marked by relatively free movement of capital that led to many US firms relocating to Asian countries where labour was cheap and returns much higher leading to present day de-industrialisation in the US.
The Ukraine war which NATO allies claim was unprovoked while Russia claims that it had repeatedly intimated to the West that Russia viewed Ukraine’s NATO membership, which began in earnest by the US-led NATO countries in 2014 with the successful what many claim is a CIA engineered coup détat against Yanukovich, as an existential threat and cites that as a reason for the 2022 attack.
Be that as it may, the fact remains that the new international world order is not based on a unipolar world, though many argue that it was never starkly unipolar, but a multipolar world, premised on the fact that China with its high growth rate is catching up with US economy – at present it has nearly an 18 trillion dollar economy against a 23 trillion US economy while militarily the US is clearly checkmated as Russia has shown its capacity to take on Army Tactile Missile System (ATACMS), a supersonic missile system, with Oreshenik, a hypersonic ballistic missile with no known system of deflection.
To date Trump has threatened high tariffs against specific countries, which lends credence to the charge that he is weaponising tariffs to achieve his foreign policy objectives. There have been some parleys with the leadership of neighbouring countries, particularly Canada and Mexico, but not with China that the US views as a major rival as a rising economic and military power.
However, while Pakistan is too small a player in the trade arena to be on Trump’s radar; however, it must not be forgotten that the US has been, and continues to be, a firm adherent of a policy of ‘you are either with us or against us’.
Our administration will have to tread carefully by balancing our emerging geopolitical considerations with existing heavy economic reliance on the US-led West and the best way forward would be to task the National Security Committee, with membership of the Prime Minister, and ministers of finance, defence, foreign affairs, information, and interior as well as chiefs of defence institutions to urgently revisit the 2020 National Security Policy (NSP) and transform it into a cohesive and implementable long-term policy.
Copyright Business Recorder, 2024