Trump's Trade War: A Self-Inflicted Wound with Global Repercussions

The global economy is bracing for impact as former President Donald Trump is once again escalating trade tensions. According to Claudi Pérez (2025), writing for *El País*, Trump's strategy is rooted in fear, using threats and ambiguity to gain leverage in negotiations. His recent announcement of tariffs, potentially reaching 20% on goods from the European Union, is sending shockwaves through markets and sparking concerns about long-term economic stability. This approach, while seemingly bold, is being scrutinized as a potential “shot in the foot” for both the U.S. and the global economy.

Immediate Market Instability

The immediate aftermath of Trump's announcement has been predictable: market instability. Stock markets are experiencing significant drops, currency markets are volatile, and safe-haven assets like gold are surging. This financial turmoil acts as a powerful amplifier of economic stress, particularly in an era already defined by uncertainty. As Pérez (*El País*, 2025) notes, these market reactions are the initial responses to Washington's moves, signaling potential economic pain points.

Long-Term Economic Consequences

Beyond the immediate market fluctuations, economists are deeply concerned about the long-term consequences of these tariffs. Increased tariffs, often described as “beggar-thy-neighbor” policies, are expected to disrupt global supply chains, fuel inflation, and delay crucial investment decisions. These factors will ultimately inflict damage on the real economy, potentially triggering a self-induced crisis within the United States. *El País* emphasizes that analysts foresee significant tensions and seismic shifts in the global geoeconomic order (Pérez, 2025).

Potential Impacts:

  • Disrupted Supply Chains: Tariffs can make it more expensive for companies to import raw materials and components, leading to higher production costs and reduced competitiveness.
  • Inflation: Increased import costs are often passed on to consumers in the form of higher prices, leading to inflationary pressures.
  • Investment Delays: Uncertainty surrounding trade policy can discourage businesses from making long-term investments, hindering economic growth.

The Uncertainty Factor and Historical Parallels

A key characteristic of this situation is profound uncertainty. As the world navigates this period of heightened instability, Pérez (*El País*, 2025) suggests turning to historians for perspective. Trade wars have a history of triggering significant global events. The Great Depression, for example, led to the rise of fascism and a world war. While the 2008 Great Recession was mitigated by government intervention, it fueled populism and inequality, ultimately contributing to current geopolitical tensions.

The Rise of Inequality and Populism

The economic anxieties of recent decades have created fertile ground for populist movements. The Great Recession, in particular, exacerbated inequality, transferring wealth from the middle class to the wealthy. This dynamic, fueled by globalization's uneven benefits and the neglect of economic losers, is a significant driver of Trump's support. According to Gary Stevenson, author of *The Game of Money*, «The rich get the assets, the poor get the debt, and the poor end up paying their entire salary to the rich just for living in a house. The rich use that money to buy the rest of the middle class's assets, and the problem gets bigger every year.» This economic frustration has morphed into political upheaval, with Trump's trade policies representing a new engine of inequality and poverty.

Europe's Response and the Canadian Election

The world is now watching how Europe will respond to Trump's trade aggression. The EU has a few days to formulate its strategy. The upcoming elections in Canada may offer an early indication of the political response to Trump's policies. The Canadian Liberal Party, advocating a mix of anti-Trumpism, patriotism, rearmament, and economic security, is currently leading in the polls. Whether Europe will adopt a similar approach remains to be seen, depending on the continent's own electoral landscape.

Navigating "Interesting Times"

The Chinese curse, “May you live in interesting times,” seems particularly apt in the context of Trumpism. While the situation is fraught with risk, the global economy is adapting and exploring strategies to mitigate the potential damage. The impact will depend on how businesses react, whether they invest in the U.S., and how financial markets respond. As *El País* points out, the markets can be a powerful force, potentially curbing the most extreme effects of Trump's policies (Pérez, 2025). The coming weeks and months will be crucial in determining the long-term consequences of this trade war, and in understanding how the global economic order will be reshaped.