Daily Times

You only needed to see headlines coming out of the annual IMF and World Bank fall meetings this week in Washington to understand how deeply US President Donald Trump’s precious tariff war with China has slowed down the global economy. Not only are economies slowing, deficits widening and unemployment rising across much of Asia and Europe, there are also equally upsetting reports of factories shutting down and workers laid off from as far apart as Japan and Iceland. And it was not out-of-place for World Bank President David Malpass to remind everybody how it was the US in the 1940s, after the world had seen for more than a decade just what unnecessary tariff wars can do, that championed the global economy with its simple motto: there’s no limit to prosperity and broadly shared gains benefit everyone.

Now, ironically, it is the White House that has spear headed a tariff war driven global slowdown, just when the world economy had got back on its feet after another long bout with another great, lingering recession that redefined global finance in a large way. This war, driven by one man – there’s much to suggest that not many in Washington agreed when Trump tweeted about the first tariffs about 15 months ago – is already well on the way to reducing global growth to three percent this year. And it has already reduced China to its slowest growth since the 80s.

That, unfortunately, is very bad news for Pakistan. Assessments are, understandably, still being carried out, but if China continues to feel the crunch much longer there’s a good chance of some CPEC deadlines being pushed down the calendar. And, of course, it’s not just CPEC that we rely on China for; Beijing is still our first port of call – sometimes it becomes the Gulf countries – for emergency loans, turning around state enterprises, etc.

There are important lessons in this tariff war for everybody, not just countries like Pakistan. For starters, the entire global order is coming to terms with just what a single-minded US president, despite local and international opposition, can do to the global economy. Some countries, like Germany who were some of the leading exporters for the last few years, are already revising economic models based primarily on trade. And smaller countries, like Asia’s emerging markets, are looking to diversify in whatever way they can so they no longer put most of their eggs in few baskets. And, unfortunately, there’s still no sign of this senseless trade war ending. *