London, Thursday, November 07, 2024-The global economy faces fresh uncertainty after Donald Trump’s election victory, with concerns mounting over the potential impact of US-led protectionist policies.
Economists and policymakers across Europe and Asia are reassessing risks as Trump’s promises to tighten trade restrictions and cut security ties with allies loom. German and European economies, which rely heavily on exports, are especially vulnerable.
Germany’s Kiel Institute for the World Economy president, Moritz Schularick, described Trump’s term as a “difficult economic moment,” pressing Berlin to bolster its defense spending in response.
Equity markets initially surged, buoyed by expectations of corporate tax cuts and deregulation. However, potential tariffs — including a proposed 20% tax on global imports and a hefty 60% on Chinese goods — could ignite a trade war, warned Oxford Economics’ Innes McFee.
Global shipping rates have already begun fluctuating as companies rush goods to the US before Trump’s inauguration.
Economists predict a hit to the Eurozone if US tariffs are enacted. With US -bound exports accounting for 20% of EU exports, the Eurozone’s fragile economic recovery could suffer. Ireland’s economy, with close US ties through American tech and pharma companies, and Germany’s car sector are poised to feel immediate pressure to shift production to the US
Asia is equally exposed, particularly China, which could face Trump’s proposed 60% tariff. Mexico, the largest US exporter, may face a 200% tariff on cars unless it curtails migration.
The long-term effects depend on Trump’s approach to trade, with global leaders preparing for the possibility of heightened economic volatility.
