Contributed by Joe Montero

It’s difficult to know where to start when considering the impact of Donald Trump’s tariff war against the world, when the fallout is already affecting everything. From the beginning of a new decline in the global economy, to the impact on individual nations, the growing defensive actions of many nations, and rising political tensions, which at worst, could potentially lead to war, everything ensures that no nation will remain untouched.

Ridicule of the current United States president has become a fashionable pastime. Don’t be fooled. Too much focus on the smarts or otherwise of Donald Trump hides that there is much more going on. The tariff issue primarily about the intent of a faction of American billionaires to feather their own nests at the expense of everyone else.

Because Australia is tightly enmeshed into the American economic and political orbit, there can be no escaping the effect that this will have on all Australians. The pain is already being felt, and it will get worse as the impact of what this is doing domestically and how these effects to global economy begins to bite harder.

Some of us have collectively spoken, and written volumes on the rise of those whose business interests depend on the manipulation of financial instruments, the creation of credit, and speculation on asset prices, and about they’re being the most powerful section of big business in today’s reality. These recognitions don’t fit into the neat and acceptable models of the economy promoted by most of the commentators on big media and what is acceptable in the arena where our politicians operate.

One may ask, what has this got to do with Trump’s tariff war. A lot actually. Knowing why is there is a tariff war is necessary to being able to do something about it. Imposing what is really a tax on consumption on American consumers will not rebuild manufacturing and the American economy. It will lead to economic decline instead.

Trump and those around him don’t care because others will pay the price, while they profit from *the supply of credit and the manipulation of assets. In this respect, tariffs serve as a form of income redistribution in favour of those Donald Trump represents.

The trouble is that the economic instability being caused is damaging the economic system on which they depend, and this is manifesting itself in various ways. One of them is that it’s wiping out billions of dollars from share markets. Elon Musk is the best-known example of this effect.

Yesterday (Monday 7 April) around $110 billion was wiped off the Australian share market, deepening a downward trend. This was a fall of 4.2 percent. The quantity of money lost in the United States market dwarfs this, and It fell by almost 5 percent in this much larger market. A telling part of this is that the futures market component, one which the Trump faction is particularly involved in, fell by 4.2 percent.

Share prices are seemingly a long way from the everyday life of most people, with except for the impact on superannuation. But unstable share prices affect investment and the prices of everyday necessities. Corporations will adhere to their priority of looking after the shareholders and pass of increased costs as higher prices. We had a taste of it during the Global Financial Crisis of 2008/9. The damage goes further. The tariff policy is an attempt to restructure what has become unsustainable debt through imposing a greater burden of borrowers and strengthening the credit dependency of the economy.

Their tariffs are not only rebounding through the fall in share prices. This with the mass sackings and other measures are causing a powerful counter reaction. Millions marked in the streets this week across the United States against the Donald Trump presidency and the rising cost of living.

The greatest impact will be on wage earners through the loss of jobs and loss of government services, as more taxpayer money is used to prop up corporations. Businesses, even big ones outside the narrow circle of beneficiaries will also be losers. In fact, there is a growing divergence between these interests and those of Trump’s beneficiaries.

According to Jared Mondschein, Director of Research at the United Sates Study Centre, “About two-thirds of Americans are saying that Donald Trump is not focusing enough on lowering costs for them, 55 per cent of them say he has focused too much on tariffs.” He said this in an interview with the American ABC’s The World Program.

“I think the market reaction has been one of shock,” David Bassanese, Chief Economist with BetaShares, told the ABC.

In Australia, the reaction there is growing concern about where this is leading us, and disquiet over the Australian government’s seeming inaction. Even though the tariff imposed on Australia’s exports to the United States is only 10 percent, there is a perception of injustice and recognition that it could increase at any time.

The banks predict that even the 10 percent will have an impact, and that it will bring about an economic slowdown, which will cause a fall in the short-run interest rate. The rise in business uncertainty will be enough to further dampen investment and cost jobs, and this will ratchet down consumer spending.

In theory, inflation should decline. But in the real world the Australian economy is highly monopolised, and this allows the monopolies to impose higher than they would otherwise persist. Expect them to use this power to compensate for losses.

By failing to respond and take a stance against Trump’s tariff war and meekly accepting what has been done, the Australian government is risking reputational damage and laying seeds for future problems in trading relationships with other countries, when many of them are standing up. The global reaction against Trump’s tariffs is building a head of steam. Thus, the world is dividing into two camps. One that stands up and one that is on its knees.

If the this persists, the cost of not standing up will be to encourage more of the same treatment, and to lose alternative trade opportunities. This reality is particularly pointed for Australia, given that China is our biggest trading partner and subject to the worst of these tariffs.

The tariff imposed on China is now 104 percent, and China is defending itself with a 34 percent tariff on American goods, retaliatory moves in the financial market, limits on the importation of certain products, control over rare earth elements, and a lawsuit at the lodged with the World Trade Organisation.

Cartoon by Xia Qing/Global Times

The risk is that China will eventually go and do business with others more friendly towards them and dump Australia, which is less friendly. Opportunities with Europe are limited. Our major neighbours are shifting elsewhere, and Asia is the new engine of the global economy. Where will be the will the prospects for the Australian economy be without adjusting to these realities?