“The next trade wars launched by Donald Trump will be much more serious”

Former Indian central bank governor Raghuram Rajan, during a television interview, in Washington, April 13, 2023. BLOOMBERG VIA GETTY IMAGES Former chief economist of the International Monetary Fund (IMF, 2003-2006) and former governor of the Indian central bank (2013-2016), Raghuram Rajan is one of the rare economists to have anticipated the financial crisis of 2008. Professor at the University of Chicago business school, he believes that Western countries that want to protect their industries overestimate the impact on employment, and pleads for indebted countries to default instead of sacrificing their spending. education and health. How do you explain Donald Trump’s victory? Over the last twenty years in developed countries there has been a lot of job destruction, particularly middle-income jobs which could be occupied by people without qualifications. These destructions have generated a feeling of frustration, also fueled by growing precariousness. This anxiety is amplified by the speed of technological change. It is machines or computers that replace humans in routine tasks, whether on an assembly line or in an office. However, it is much easier to point the finger at the factory that moves abroad. This fetishization of manufacturing is overblown. Firstly because the jobs which have disappeared from developed countries are not going to come back and secondly because the industry is creating far fewer jobs than before. It is now capital intensive and no longer labor intensive. Also read the column | Article reserved for our Economy subscribers: “The major risk is that Trump keeps his campaign promises” Read later With Trump’s return to the White House, should we prepare for new trade wars? There are countries with which tariff blackmail serves as negotiating leverage, when Donald Trump, for example, threatens Mexico with customs duties if it does not improve its fight against drug trafficking, and often it stops there. . The case of China is different and responds to two logics. Among Mr. Trump’s advisers, there are those who believe that increasing customs duties will create jobs in the United States. But there are also those who want to contain China’s expansion. All this leads me to believe that Washington will take measures against Beijing. And if Chinese exports fall significantly, this will also lead to a drop in its demand, which poses a problem for the rest of the world. Luxury brands will, for example, suffer the consequences, but also developing countries that sell their raw materials to China. And this time, Washington will not let Chinese imports pass through other countries like Mexico or Vietnam. Moreover, Mr. Trump threatened to impose 100% customs duties against electric vehicles assembled by the Chinese manufacturer BYD in Mexico. The next trade wars led by Mr. Trump will be more and more indiscriminate, they will no longer differentiate between China and other countries, they will therefore be much more serious. You have 55.24% of this article left to read. The rest is reserved for subscribers.



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