EASING BUSINESS CONCERNS
Businesses are also relaxing their fearful crouch.
Polling of a panel of businesses by the consultancy Oxford Economics shows that fears of a global trade war over the next two years are back to the levels seen before Trump’s election and less than half their peak of last June. Respondents now rate geopolitics – in the hard sense of outright war or heavy sanctions – in places like Ukraine, Taiwan, the Middle East and Venezuela as a far bigger threat to the global economy than a trade war.
Some of those shocks, particularly China invading or blockading Taiwan, will have massive implications for trade. But companies’ perception of the threat from protectionism itself in the form of tariffs, quotas, local content requirements and so on has sharply receded.
Making predictions is obviously a big hostage to fortune, but trade – particularly in goods – has so far vindicated those of us who habitually point out its remarkable powers of self-correction to economic and political shocks.
Of course the longer-term risks remain, and perhaps have intensified, notably the use of mineral export controls, battles for technological supremacy and the politicisation of payments systems.
But the tentative conclusion from a year of Trump is that his antics with tariffs are another shock the global trading system is weathering without catastrophe. The US president is strong, but market forces are stronger.