Economic vandalism or Insider Trading on a global scale?

It is clear there is a case to revisit globalisation, a system of trade that was underpinned by the desire of consumers in developed economies for cheap products like the £2.00 T-shirt and industrial products like steel.  Investors saw the opportunity that cheaper labour costs meant more corporate profits, more corporate profits meant more dividends, and that meant more wealth, not trickle down but gushing up. The consequences resulted in the offshoring of millions of jobs to China and Southeast Asia, creating Rust Belts in developed economies, a key element in the rise of Populism. On the other hand, since 2000, almost a billion people have been taken out of extreme poverty. Let us not get too excited, that means according to a report by Our World in Data published in 2023 by Max Roser, 58% of the world population earns no more than $2.15 a day, not something to write home about. In addition, the gains of globalisation exacerbated global income and wealth inequality. According to the 2022 World Equality Report, just 1% of the world’s population owns 38% of the world’s wealth, while 50% of the world’s population owns 2%. In effect, globalisation has benefited capital and not labour.

Let us go back to the tariffs. Trump’s liberation day, or as the Economists described it as Ruination Day. According to Trump and others in his entourage who have not seen daylight since Jan 20^th, these tariffs have been implemented to:

1. Bring home manufacturing jobs and investment lost over two decades of globalisation.
2. A form of income to deliver tax cuts.
3. Reduce America’s trade deficit.
4. Make America Great Again
5. Bring other countries to heel.
6. To stop contraband and illegal migration.

The result of Trump’s understanding of economics has resulted in the crash of global stock markets running into trillions of dollars, pensions ravaged and higher inflation just on the horizon. Most importantly, on the geopolitical front, he has alienated and lost the trust of close neighbours and allies from east to west. The remaining 6 from the famous G7 may focus on improving trade between themselves and be cognizant about China dumping exports on them. America may be the largest economy in the world, at 25% of the world’s GDP, which is $110 trillion, but it accounts for under 15% of global imports; thus, its economic clout is not as big as Trump thinks. As for China, its exports to the US represented 20% of its total exports in 2018. By 2023, this had fallen to 13%. It seems China has learned from Trump’s first term and has pivoted east and to its 1.4 billion internal market.

The reason why we now have the 90-day pause on tariffs falls into four areas: two economic, one political and the other a scam.

1. Bond markets reacted by selling US debt, and yields/borrowing costs rose to 4.5%, which undermines the dollar as a safe haven for investors. The rate for 10-year bonds jumped half a percentage point, adding $10’s of billions to US interest payments.
2. The inflation risk, something Trump banged on about during the presidential election.
3. The hammering of middle America’s pension pots.
4. The Scam: Here, Trump and his billionaire friends in the cabinet knew the impact of announcing punitive tariffs would have on the market. It is a good guess to assume that they sold off shares before liberation day. The markets dived, losing $6 trillion. Just before the announcement of the 90-day pause, they bought the shares back. On the announcement of the 90-day pause, the markets bounced back, and they bailed out again. Trump and his billionaire cabinet members make Bernie Madoff look like an amateur. This analysis may be speculative, though, if the President dared to sell Trump Bibles and never feared offending God, why would he give a dam about those ordinary Americans who failed to see his narcissism.

Hopefully, Trump voters at the midterms will wake up and realise that the man they voted for is only interested in himself, like every narcissist. On a quick historical note, it was Congress that gave the president the power to levy tariffs. It is time for the House and the Senate to take back control and make their constitution fit for the 21^st century; if not, the journey to authoritarianism will simply accelerate and mark the start of an inexorable decline in America’s global influence.

Suneil Sharma

11^th April 2025