Outside In | Real threat posed by Trump’s tariffs worse than a global recession

The US president cannot be allowed to replace world’s hard-won multilateral compromise and cooperation with bullying bilateralism

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US President Donald Trump holds a tariffs poster in the Rose Garden of the White House on April 2. Photo: AZUMA Press Wire/dpa

Published: 4:30pm, 4 Apr 2025Updated: 6:44pm, 4 Apr 2025

Whatever the megalomaniac hubris of US President Donald Trump in imagining his administration can bring the world’s economies to heel in his quest to “Make America Great Again”, the reality is the outcome of this tariff madness will depend not on Trump, but on how the world responds.

It will depend on whether the world recognises that the primary threat is not the potential for a tariff war to trigger a global recession and where the worst of this will fall, though this would be threat enough.

Rather, it is whether Trump succeeds in demolishing the fabric of the multilateral compromise and cooperation that have driven economic development and poverty reduction over the past seven decades, replacing it with a pattern of bullying bilateralism.

This might suit the US, as the world’s largest economy, but would be catastrophic for most of the rest of the world.

As Alan Wolff, former World Trade Organization deputy head and now a fellow at the Washington-based Peterson Institute for International Economics, argues, with the US accounting for just 9 per cent of the global goods trade, the future of rules-based trade primarily depends on the rest of the world.

Simon Evenett and colleagues at the Lausanne-based International Institute for Management Development have argued that with the exception of a tiny group existentially reliant on the US (mainly Canada and Mexico), even in a worst-case tariff war, most economies could, if necessary, replace virtually all of their US trade with statistically modest growth in trade with other countries.