The Trump II Administration announced today (here) that it is imposing stiff tariffs on goods from Mexico, Canada and China because "...they haven't treated us fairly on trade...". The Wall Street Journal (here) is calling the move "...the dumbest trade war in history...". Other than the Trump II administration breaking decisively with Neoliberalism (free trade and Globalization were key elements of Neoliberal orthodoxy), what is going on here?
Let's first look at the state of Globalization among the trading partners (US, CN, CA, and MX) using the KOF Index of Globalization. The dominant state variable attractor path for the trading system is displayed above as being driven by the USL20 model. From 1990 to 2000, the system had its ups and downs but did stay pretty much within the 98% prediction intervals for the attractor path. In 2010, the system was right on the attractor path. After that, the US-dominated system is predicted to peak somewhere around 2040. Trump is throwing a tariff-wrench in the system and, as with prior swings in Globalization, the policy may have little impact and we can expect a return to the attractor path after Trump II is gone.
But, does Trump understand that the Globalization system is reaching a peak and might well collapse in the future? Is Trump attempting to pull globalized US industries back on-shore before system collapse? Trump claims to act intuitively and his ample gut might tell him that the global World-System is collapsing. At this point, my goal is to get a stake in the ground to understand what has happened after the Trump II Administration is over.
Notes
The Measurement Matrix for this KOF Index of Globalization system is presented above. KOF1=overall growth, KOF2 is dominated by the US and KOF3 is dominated by Canada. All look at KOF2 and KOF3 in future posts.
