US President Donald Trump’s escalation of trade wars and protectionism could tip the global economy into a recession, according to the founder of one of the world’s largest independent financial advisory organisations.
In a note to clients, Nigel Green, CEO and founder of deVere Group, said President Trump’s controversial state visit to the UK is not as concerning as his escalating "multi-front" trade wars.
The President and First Lady Melania Trump will be guests of the Queen and attend a ceremony in Portsmouth to mark 75 years since the D-Day landings. He will also have official talks with UK Prime Minister Theresa May at Downing Street – a subject of protests and consternation in certain quarters.
In May, Trump raised the tariffs on $200bn worth of Chinese goods from 10% to 25%. US representatives have also threatened to impose tariffs on $300bn in remaining Chinese imports.
Last week, the President also took to Twitter to announce a 5% tariff on all goods coming from Mexico would take effect on 10 June. The tariff would then rise by 5% each month, with tariffs topping out at 25% by October in response to illegal immigration issues.
Trump has also taken swipes at India, and was recently involved in protracted trade spat with Canada before reaching a resolution.
Green said: “It is unfathomable that Trump’s banquet with the Queen, which is about pomp and ceremony, is sparking more outrage and controversy than his trade policies that threaten to send the world into a global recession.”
Trump is the democratically-elected leader of the US, the UK’s largest and most powerful ally in the world. “To me, it seems pretty standard he would be afforded a state visit. Strategically less important, and more controversial, undemocratically-elected, leaders have been welcomed in the same way.”
Green added: “Bizarrely, there have been no heated mass protests and derogatory inflatables about Trump’s multi-front trade wars that make a global economic downturn a real possibility.”
The deVere Group said rising protectionism, the tit-for-tat dispute between the US and China, the world’s two largest economies – and now possibly between the US and Mexico too, will inevitably hit consumers around the world by making it harder for all firms to operate, encouraging them to push steeper prices onto their customers.
“This will drive global demand lower - and this will force job and wealth-creating firms around the world to cut costs, meaning less investment, fewer jobs, and, therefore, less tax revenue for governments.”
Green opined that Trump’s “anti-globalisation policies have real consequences” for people around the world, especially as China is wheeling out ‘counter measures,’ and as the White House last week reopened the North American front in his global trade wars.
Rather than focus on his dinner with the Queen, there should be “people on the streets calling for free trade and the scrapping of US-led protectionism in order to boost the world economy,” he concluded.
