Book Review | Formidable Case Against Trump the Economist
Mr Trump loves tariff and by imposing it he has “made the goods Americans buy more expensive, and disrupted the global economy”.
In 136 pages and six chapters, Philip Coggan has built up a formidable case against Donald Trump stating that “this is no way to run the world’s largest economy”. Indeed, the former Economist and Financial Times journalist seems to have put across his points against Mr Trump so effectively that it would be hard to counter them.
Mr Trump loves tariff and by imposing it he has “made the goods Americans buy more expensive, and disrupted the global economy”. The “global trade system which is not the result of any individual’s plan, arose from decades of trial and error”. The author points out that Mr Trump and he both took economics degrees in the 1960s. But Trump has “forgotten or never understood” what he studied.
The basics of globalised, inter-dependent and inter-linked economics have been illustrated thus: “The US does not make wholly American goods, nor does the UK manufacture wholly British goods”. Products are constructed from materials and components brought in from all over the world. “Around half of all US cars are made from imported parts. When you impose tariffs on imported components, you increase the costs of domestic producers”. Thus, “higher consumer prices owing to higher tariffs would pick up US inflation”.
Though some believe this could only be a Trump tactic of pressure leading to “token concessions from foreign countries which would help him declare victory and then retreat”, the author does not think so: “The problem with optimism is that if Mr Trump has any virtues, patience is not one of them. He will see something in the news that annoys him and after a tirade on social media, announce some new restrictions.” Indeed, this “happened in late May when he announced the doubling (to 50 per cent) of tariffs on steel and aluminum”.
The other problem is the damage already inflicted by Trump to the global trading system including the World Trade Organisation. The entire system, which was assiduously built after years of painstaking and laborious negotiation, “has been replaced by the whims of one man; the WTO has been effectively neutered”. And “even if other countries make a deal with US, they know that high tariffs could be re-imposed at a moment’s notice”.
“And finally, there is no sign that Trump has a plan to replace the global system he has been smashing.” The system emerged after 1945 and the “result was 30 years of unparalleled economic growth across Western world”. This is the age that “Trump voters are harking back to, but it was marked by liberalisation of trade and high taxes on wealthy, not by increasing protectionism or tax cuts for billionaires”.
The author analyzes the jobs crisis and increasing inequality perceptively and ends with an interesting chapter called “The man without a plan”. This compelling book should be compulsory reading for Indians dealing with a tempestuous Trump and his cantankerous company.
The Economic Consequences of Mr Trump: What the Trade War means for the World
By Philip Coggan
Profile Books
pp. 112; Rs 299
