2 weeks Ago By Yasir Habib Khan
For much of the 20th and early 21st centuries, the global economy has been characterized by a Western-centric order, a near hegemony dominated by the United States and Europe. This “Old Boys’ Club” wielded considerable influence through bloc politics, zero-sum game and arm-twisting of international institutions. Because old-fashioned economic order has been infested by gazillion contradictions, injustices and disparities widening gap between rich and poor, many have already expected its doom in phases.
However, instead of bit by bit, decay has raced toward its terminal ending as a result of recently created the US’s “tariff extremism” around the globe. Since US’s tariff offensive eclipsed friends and foes, the contours of new global economic system are in making with leading forces of emerging markets such as China and global south. Since returning to the presidency, Trump has unleashed a new wave of “tariffs terrorism” unprecedented in scope.
Traditional allies and strategic rivals are now under the same banner, marking a radical shift in Washington’s trade policy that hardens positions taken in Trump’s first term and now, amplifying them with an unbridled display of power. Three arrested for blackmailing citizen In order to assess as to why US-led world economic order that propagates protectionism, decoupling and unilateralism is doomed to fall. And what are the merits of emerging law-based multipolar world economic order that will steer all toward sustainable prosperity, there are vivid rationales.
One of the most immediate reasons which has started dismantling US-led economic order is that protectionism is increasing in consumer prices. Tariffs and import restrictions lead to higher costs for imported goods, which are often passed on to consumers. For example, the tariffs imposed by the U.
S. on Chinese goods have resulted in higher prices for electronics, clothing, and household items, disproportionately affecting low-and middle-income households. This inflationary pressure can reduce consumer spending and overall economic growth.
Protectionist policies stifle economic growth by limiting competition and innovation. When domestic industries are shielded from foreign competition, there is less incentive to improve efficiency and invest in new technologies. This can lead to stagnation in productivity and a decline in the overall competitiveness of the economy Furthermore, protectionism disrupts global supply chains, leading to inefficiencies and increased costs for businesses that rely on international trade.
Man shot at, wounded during robbery in Gujrat The rise of protectionism, tool of tariff terrorism, has also strained international relations, as countries engage in retaliatory measures that can escalate into trade wars. The ongoing US-imposed trade tensions on China serve as a prime example, with both countries imposing tariffs on each other’s goods, leading to uncertainty and volatility in global markets. Such tensions can hinder diplomatic relations and cooperation on other critical issues, such as climate change and security.
Protectionism, weapon of tariff extremism, create inefficiencies within domestic industries by reducing competition. When companies are shielded from foreign competitors, they may become complacent and less responsive to consumer needs. This can result in lower-quality products and services, ultimately harming consumers and the economy as a whole).
Additionally, industries that rely on imported inputs may face higher costs, further exacerbating inefficiencies. 40-kg adulterated red chilli seized in Multan Since protectionist policies become more entrenched, the risk of long-term economic fragmentation increases. Countries may become increasingly isolated from global markets, leading to a decline in international trade and investment.
This fragmentation can hinder economic growth and development, particularly in emerging markets that rely on access to global supply chains. The potential for a fragmented global economy raises concerns about the future of multilateral trade agreements and international cooperation. The cumulative effects of rising protectionism, linchpin of US-led economic order is destined to lead to a slowdown in global economic growth.
As trade barriers increase, international investment may decline, further exacerbating economic challenges in many regions. Rot has set in for US-ridden global economic order. The dollar, for decades a safe haven, fell about 1.
7pc on April 3, its highest daily drop since November 2022, after President Trump imposed tariffs on imports. Stock markets also tanked as tariffs ignited recession worries. TLP Unchallenged Left unchecked, a crisis of confidence in the dollar could also undermine its position as the world’s reserve currency, according to market commentaries.
The implementation of US tariffs imposed on April 2 despite 90 days pause can be seen as “the start of a march towards Europe’s independence”, European Central Bank head Christine Lagarde told France Inter radio. The US administration’s not-so-secret plan is also to rebalance trade by weakening the dollar, analysts say, adding a way to do that would be to enlist foreign central banks in a coordinated effort to revalue their own currencies. Dwelling on Trump, tariffs and the fate of the dollar, Scottish-American political economist Mark Blyth argues that America’s protectionist policies reflect a global economic reordering that is already underway.
Given untoward situation that has been laying down foundation of new world economic order, global economic powers get a good chance to realign their economic and diplomatic terms. Film Revival Earlier this week, Chinese President Xi Jinping pledged to deepen “all-round cooperation” with China’s neighbors and urged the European Union to join hands with Beijing in resisting “unilateral bullying” by Washington. “The recent revival of Beijing’s economic dialogues with Japan — their first in six years — and South Korea suggests regional powers are reassessing relationships in response to American uncertainty.
Although paused for 90 days, the EU faces a new 20% tariff on up to €380 billion ($416 billion) worth of exports to the US. The EU says it plans to reach out to countries in the Indo-Pacific and Global South in a bid to counter US protectionism. During a three-day visit to Vietnam, Spain’s Prime Minister Pedro Sanchez insisted that Europe explore new markets and said his government was “firmly committed” to opening up his country and Europe to more trade with Southeast Asia.
The fallout from Donald Trump’s trade war — even with a 90-day reprieve on some tariffs — is only beginning to be felt. But one immediate knock-on effect could be to nudge the EU closer to China’s orbit. Yasir Habib Khan The writer is the president of Institute of International Relations and Media Research (IIRMR).
He tweets at @yaseerkhan. Tags: economic.
