{"id":132747,"date":"2025-04-06T23:11:00","date_gmt":"2025-04-06T23:11:00","guid":{"rendered":"https:\/\/quixnet.net\/wpinstance\/america-is-having-a-break-with-reality-on-tariffs-the-world-will-move-on-to-a-new-order-australian-broadcasting-corporation\/"},"modified":"2025-04-06T23:11:00","modified_gmt":"2025-04-06T23:11:00","slug":"america-is-having-a-break-with-reality-on-tariffs-the-world-will-move-on-to-a-new-order-australian-broadcasting-corporation","status":"publish","type":"post","link":"https:\/\/quixnet.net\/wpinstance\/america-is-having-a-break-with-reality-on-tariffs-the-world-will-move-on-to-a-new-order-australian-broadcasting-corporation\/","title":{"rendered":"America is having a break with reality on tariffs. The world will move on to a new order – Australian Broadcasting Corporation"},"content":{"rendered":"

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BERITA BAHASA INDONESIA
TOK PISIN
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Topic:<\/span>World Politics
The Australian government after May 3 will no doubt want to try to negotiate with the Trump administration about our 10 per cent tariff, but they might be better off to just work around it and move on.
The American age is coming to an end after 80 years and nine months and will be replaced by something that may be better.
We don't yet know what that new world looks like, and the journey there is likely to be painful, especially for America.
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But the train has left the station \u2014 not just because of the tariffs unveiled on April 2, but because Donald Trump has smashed the global system of alliances and co-operation, led by the United States, that has been in operation since the Bretton Woods conference of July 1944.
The US government is now having a kind of break with reality.
The Trumpists are not even right-wing or conservative in the normal sense, just tribal, recklessly macho and inept.
What's more, Americans knew who they were voting for last year because they watched him for four years, and then he reminded them last year who he is and told them what he was going to do in his second term.
They voted for him anyway and now their prices will rise because of the tariffs, many of them will lose their jobs because of the recession and their retirement savings will shrink because of the stock market decline, caused by the combination of uncertainty and the coming stagflation.
Most governments, including Australia's, are trying to decide whether to, and how to, bargain with Trump to get their tariff removed, but perhaps they shouldn't bother.
First, they are arguing against a mist of fabrication.
Australia can't agree to drop its 10 per cent tariff on American imports because it doesn't exist.
The same applies to most, if not all, of the other "reciprocal" tariffs Trump has imposed.
The federal government is worried sweeping tariffs could spark economic turmoil in the region and globally, and the impact this could have on Australia.
For example, Botswana\u2019s tariff is 37 per cent, half of the 74 per cent tariff that it supposedly has on imports from America, but that was calculated by simply taking the $US300 million trade deficit the US had with Botswana in 2024 as a percentage of Botswana\u2019s total exports to the US ($US405 million \u2013 most of which is diamonds), which is 74 per cent.\u00a0
Botswana does have a tariffs on imports from the US, mainly meat and offal, and none of them is more than 40 per cent. The average would no more than 10 per cent.
In other words, there is nothing to negotiate. Trump's calculation simply assumes that any deficit must be the result of trade barriers, even though, in the case of Botswana, America has no diamond industry and must import them.
A trade deficit is usually the result of an exporters' competitive advantage and low income, so it can't afford to buy much of what America sells.
Countries like Botswana don't have a lot of options except to allow the currency to depreciate, look for other markets, like Europe, and suffer a big hit to economic growth.
That's why the American tariffs will cause a global downturn: European employment will be hit by a wave of cheap imports and countries that have relied on exports to the US will either have a foreign exchange crisis like in 1998, or a recession, or both.
The second thing is that Trump's demands won't be confined to trade.
He wields tariffs as an all-purpose weapon to get other countries to do his bidding because he sees all negotiations as nothing more than expressions of power and competitive bullying. The tariffs in January on Mexico, Canada and China were largely designed to stop fentanyl and illegal immigrants coming into the US.
And third, the tariffs are based on a mistaken view of how the economics of modern trade works.
Trump thinks that since imports are subtracted from GDP they represent a minus, or a loss. But imports also get added to consumption and investment, so they have to be subtracted so you only measure gross domestic product.
Some of America\u2019s strongest allies are rethinking their relationship as Donald Trump\u2019s isolationism threatens to entirely remake the West.
He also thinks that if you stop something being imported, it will magically get made in America instead and lead to more employment.
Leaving aside the fact that manufacturing no longer employs human beings, only robots, that view misunderstands the complex network of supply chains that now constitute global manufacturing.
Every complex product, such as cars and smart phones, comes out of an intricate global ecosystem, and simple ones like toys and clothes are just a matter of competitive advantage, which can't be wished away.
It's impossible to overstate the revolution that Donald Trump has brought about 11 weeks into his second term.
Just six months ago, markets were on about "American exceptionalism", obsessed with the booming "Magnificent 7" companies (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla). Its economy, stock market and technology leadership were the envy of the world.
Now, the largest US bank, JP Morgan, puts the odds of a US recession at 60 per cent, the Magnificent 7 have dropped 26 per cent, the overall stock market has fallen back to where it was a year ago and stories appear daily about how China is beating the US at its own technology game, including electric vehicles, drones, AI and robots.
Perhaps Liberation Day can be seen as the world being liberated from America.
The great American cultural and economic hegemony that has lasted for more than 80 years is coming to an end.
America's global economic leadership was formalised in 1944, when 730 delegates from 44 allied nations met at the Mount Washington Hotel, in Bretton Woods, New Hampshire, and agreed to base the global trading system on the US dollar, which would in turn be pegged to gold.
The gold peg was broken in 1971, but if anything, that made the US dollar, and the United States, even stronger, especially after the collapse of the Soviet Union 18 years later.
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American leadership promoted the spread of free trade, which in turn produced seven decades of rising prosperity in the US and the world, bringing billions out of poverty.
But Trump is stuck in the idea that trade, and everything else, is a zero-sum game, that for every winner there is a loser, and no such thing as a win-win, which is how most people approach a negotiation.
The Soviet Union took 10 years to end, starting with the strike at the Gdansk shipyard in 1980 and the rise of Solidarity, the trade union, and its leader Lech Walesa, and then suddenly with the fall of the Berlin Wall on November 9, 1989.
The first election of Trump in 2016 could be seen as the Gdansk shipyard strike. In that analogy, Liberation Day, April 2, 2025, was the fall of the Berlin Wall.
After November 9, 1989, it took Eastern Europe a long time to figure out what to do with itself, and it took the rest of the world a while to come to terms with the end of the Cold War and having one superpower instead of two.
And now, 36 years later, we're back to two, with one flailing and self-harming and the other, China, disciplined and rising fast.
Alan Kohler is finance presenter and columnist on ABC News and he also writes for Intelligent Investor.<\/strong>
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