“You put the lime in the coconut, you drank ‘em both up.”
– Coconut, Harry Nilsson
Breakdown and Reordering of Trade
The breakdown and reordering of global trade via President Trump’s tariff policies will have many consequences. Long established trade relationships come with mutual dependency. Abruptly severing or restricting these ties will yank the rug out from under how people the world over pursue their livelihoods.
America imports and consumes massive amounts of goods and products Made in China and other Asian countries. Trump’s trade tariffs put the export driven economic models of these countries at extreme risk.
America accounts for over 30 percent of the world’s consumer spending. Should tariffs limit the ability for countries to export goods to America, they will be left with a massive supply glut. Thus, they will have two options: Increase domestic consumption. Or decrease production.
Certainly, it is more favorable for these countries to increase their domestic consumption. The alternative is widespread layoffs, skyrocketing unemployment, and a deep recession. But increasing consumption is easier said than done. Continue reading