The Global Impact of Trumps Tariff Campaign

Fair enough, every big organisation needs a shake up and review every now and then and I am sure the Federal Administration was a ripe candidate.

But there were few hints of the campaign on tariffs that was brewing in the Presidents mind. He did not lose any time and in weeks, the world has been subjected to a tornado of new and threatened tariffs on trade that has upended the world trade stability, wrecked the World Trade Organisation system of trade management and open access to markets.

The magnitude of what he is doing must not be lost on us who watch this game from the sidelines. After the Second World War, the USA emerged as the undisputed leader of the Free World and the largest economy ever built by a nation state. In this role it helped rebuild the economy of Germany and Japan and put Europe as a whole back its feet with the Marshal Plan. It provided the world with extraordinary leadership and example.

Taking the process one step forward, the US took the lead in establishing the United Nations and negotiating the creation of the multilateral system of financial institutions to guide and strengthen the global economy. The World Bank and the International Monetary Fund and the World Trade Organisation emerged. Based in New York and Washington, these measures created what we now take for granted as a family of nations committed to a rule based global system that provided a level playing field for all.

In the following 75 years we have seen amazing changes. World trade has grown rapidly feeding resources and opportunity to every corner of the globe. Billions have been lifted out of poverty, peace has been maintained in Europe until recently, the conflicts created by ideology have been dismantled and democratic and free market principles are now embedded in almost all the world. In all this the USA was the engine, providing resources and opportunities and even intellectual leadership.

Now, in a matter of weeks, Trump has attempted to undo the whole system in the false belief that protectionism and isolation are the way forward. He wants to make America even more wealthy than it is and to retreat into an economic and political cocoon.

After Nixon and Deng Xiaoping brought China out of isolation and into the new world system after 1975, America created the new China as its most powerful and effective competitor by allowing access to US markets and technologies. After nearly destroying Viet Nam and Cambodia and other small Asean States, the USA brought them under its wings and transformed their economies, creating millions of jobs in the process. Some of the poorest countries like Bangladesh and Lesotho were able to become major exporters to world markets and this has helped raise living standards.

Back in the USA, what Trump and his acolytes do not appreciate is that tariffs are not only a weapon, but a tax on every American. At this level (before this impasse, US taxes averaged 2,5 per cent) these tariffs could tip the US economy into recession after several years of strong growth. The idea that this will bring back the old economy that created the USA as a world power is totally false. Instead, the US economy has been leading the world in productivity and growth and creating over 250 000 new jobs every month! That is because Americans are making the transition to the new economy based on technology and not iron ore and oil. Isolation means slower growth or no growth and lower incomes and higher costs.

But where is the America that I used to know? A deeply Christian country whose farmers fed the world. A generous nation who did not back away when a real need emerged. I well recall 2007 and 2008 here in Zimbabwe when we were a failed State in every way. Our schools closed, our hospitals mortuaries, 150 000 cases of Cholera in our capital city, no food in our shops, no water in our taps, no fuel in our filling stations. 500 000 economic refugees fleeing the country every year. The highest mortality of children under 5 and women in childbirth, in the world.

The South Africans, suddenly aware of the extent of the problems and the impact on their own society and economy, stepped in and began to force the ruling elite to reform. First a relatively free election in 2008 when the MDC won the election by a clear margin and then forcing us into a GNU when Zanu tried to overturn the election result. While this was going on USAID, without any formal request for aid, ordered food supplies for the bulk of the population. Hundreds of thousands of tonnes of food aid were shipped to southern African ports and carried up to Zimbabwe where it fed over three quarters of our people.

It was the only reason why we survived and were able to maintain stability while the President of South Africa sorted out our politics. When finally in 2009 a GNU Government was sworn in, the western countries, in many ways led by the United States, formed a group they called “the Fishmongers” after the restaurant where they held their first meeting. This grouping then went on to help us back onto our feet spending over US$4 billion in the process. By 2013 we were able to again meet our own needs and the efforts of the USA and other aid agencies, and the World Bank retreated into the background.

The astonishing thing about this aid was the almost complete absence of any need for recognition and thanks. The aid came without any ties or need for repayment. The main USAID program was reinforced by Christian agencies in the USA and Canada which supplied food aid and other forms of assistance. The second major example of American generosity was during the Bush administration when Aids swept the world, and Bush authorised a program to provide the expensive medical treatments for HIV and Aids. Zimbabwe had 1,5 million cases of HIV and many millions of people are alive today because they could get their needs met without cost.

Russia and China and other Communist States such as Cuba and North Korea took no part in these humanitarian efforts by the USA and Europe. In almost every crisis around the world, the one common feature has been food labeled with the World Food Program or USAID, nearly all of it funded by the US Government. Now all of that is under threat by a US Government that seems to stand by its mantra of putting “America First”.

The tragedy is that there is little recognition of the fact that as the most powerful economy in the world, the USA has the capacity to open its markets to products produced elsewhere at a lower cost than they can produce the same thing. That open markets and free trade and market based principles have not only lifted billions out of abject poverty but also strengthened the US economy in a thousand ways. It is no accident that the US dollar is still the currency of choice across the world and the reserve currency for most. It is also because the USA has been not only the cornerstone of the world economy but always its most reliable partner.