#any errors or misinformation in the english are my own lack of understanding not reflective of the source material

[lianxi-fanyi]

[Trump 2.0] Shrouded in Darkness: The Biggest Obstacle for the world economy in 2025 will be: Uncertainty.

By: Jonathan Josephs, BBC correspondent

Inflation, interest rates, and tariffs will surely make 2025 an interesting year for the global economy. The International Monetary Fund predicts growth rates for 2025 will remain at 3.2%. But what does that mean for the rest of us?

Just a week before Christmas, several million American borrowers received a happy gift: the third consecutive interest rate cut. 

However, the stock market fell substantially because the world’s most powerful central banker, Chair of the US Federal Reserve Jerome Powell stated the struggle against inflation is still ongoing. People should not expect further rate cuts in 2025. 

He said, “From now on, we are in a new stage. We are very cautious about further rate cuts continuing to lower interest rates.”

In the last few years, the COVID-19 pandemic and the war in Ukraine have caused commodity prices the world over to rise. Though commodity prices remain high, it is evident that the speed at which they have been rising is slowing down. 

Despite this, in November the inflation rate in the US, the Eurozone, and the United Kingdom rose to 2.7%, 2.2%, and 2.6% respectively. This has raised concerns in many central banks regarding the “final battles” in the war against inflation. Their goal is an inflation rate of 2%, which could be easier to reach if there is economic growth. 

However, JP Morgan Head of Global Macro Research Luis Oganes said the greatest difficulty for global economic growth, “is uncertainty, and uncertainty comes from the US entering a second Trump presidency.”

Since Donald Trump won the general election in November, he has been incessantly threatening major US trading partners such as China, Canada, and Mexico with new tariffs. 

Oganes said, “America is adopting increasingly isolationist policies, like higher tariffs, in an attempt to more effectively protect American manufacturers.”

“While this aids American economic growth, at least in the short-term, it will hurt many nations that depend on American trade.”

Former IMF Chief Economist and Obama economic adviser Maurice Obstfeld said the tariffs will be “catastrophic” for Mexico and Canada, but they will also be “harmful” to the US. 

Taking car manufacturers as an example, he pointed out that they “depend on a supply chain spanning all three countries. If you disrupt the supply chain, the car industry will face great repercussions.”

He said this could lead to higher prices, suppressing demand, harming company profits, and affecting stock prices. 

Obstfeld, who is currently with the Peterson Institute for International Economics, said, “To introduce this type of tariffs on a world so heavily dependent on trade could greatly hamper economic growth, even sinking the world into a recession.”

The threat of tariffs was one of the factors that forced Canadian Prime Minister Justin Trudeau to resign. 

Although most goods sold between China and the US have already weathered tariff restrictions under the first Trump administration, the threat of new tariffs poses a challenge in the upcoming year for the world’s second largest economy. 

Chairman Xi Jinping, in a new year's address, conceded that “the uncertainty of the foreign markets pose a challenge,” but he stated that China’s economy is “on an upward track.”

Cheap consumer exports are crucial to China’s economy. If prices rise because of tariffs and cause demand to fall, then this will complicate the government’s attempts at resolving many domestic struggles, including sluggish consumer spending and industrial investment. 

According to a report from the World Bank, these efforts are already showing results. In late December, the World Bank forecasted China’s economy to grow from 4.1% to 4.5% in 2025.

The Chinese government has yet to release its goals for the economy’s growth rate in 2025, but they believe that last year the growth rate reached 5%.

World Bank Country Director for China, Mongolia, and Korea Mara Warwick said, “To address the issues in the real estate market, enhance the social safety net, and improve regional government finances, enabling continuing economic recovery will be crucial.”

American Chamber of Commerce in China President Michael Hart said these internal struggles demonstrate the Chinese government’s “increasing welcoming” of foreign investment.

During the Biden administration, Chinese-US relations have worsened and tariffs have increased. So some companies desire to shift manufacturing to other places in the future. 

But, Mr. Hart noted, “China has spent the last 30 to 40 years becoming a major manufacturing power,” so despite “companies already trying to reduce associated risks…right now no one is prepared to replace China completely.”

Another industry that could continue to become the focal point of a trade war is electric vehicles. Last year, China produced over 10 million electric vehicles, prompting the US, Canada, and the EU to enact tariffs against her. 

Beijing expressed this action to be unfair and raised a complaint with the WTO.

However, it is the potential Trump tariffs that cause the EU to worry. 

Last month, President of the European Central Bank Christine Lagarde said, “Trade restrictions and protectionism are harmful to economic growth. Ultimately, the influence it will have on inflation is yet uncertain, (but) in the short term, it’s probably inflationary.”

France and Germany are traditionally the engines behind Europe’s economic growth. But last year, in the midst of political unrest, the outlook of these two countries was not too good. This signals that although the Eurozone saw some growth recently, it might still lose force in the next year unless consumers increase consumption and businesses increase investment. 

According to one survey in the UK, taxes and wages rising could lead to prices rising as well. 

One obstacle for lowering interest rates within the Eurozone is that inflation rates have remained at 4.2% for member nations. What is important now is targeting the prices of goods which are relatively unaffected by external factors. Though this is almost twice as high as the global goal of a 2% inflation rate, strong wage pressures will continue to push inflation rates down. 

Sander van’t Noordende, CEO of the world’s largest HR consulting firm Randstad, said America’s situation is also similar. 

“To take the US as an example, in 2024 the wage inflation was still hovering at 4%. In some Western European countries, it is even higher than this.”

“I believe there are 2 contributing factors. One, since there is a scarcity of high-skilled labor, of course there would be inflation. Secondly, people are demanding a greater remuneration for the work they do.”

Noordende added that these added costs are then passed on to consumers, which worsens the problem of rising inflation. 

He says the sluggish global employment market reflects the lack of “vitality” in industry, but economic growth is reversing this trend. 

“If economic prospects are good, industry grows, and firms can hire more people. If people see interesting opportunities, then we will begin to see people switching jobs everywhere.”

Trump will take office in 2025. Cutting taxes and easing regulations are part of his economic plan to help the American economy continue to flourish. 

Oganes of JP Morgan said, “Even though he is returning to the White House on January 20th, there are still many issues which have not been addressed, but all the signs point towards America continuing to practice exceptionalism at the expense of the rest of the world."

He hopes global inflation and interest rates will continue to fall, but he warns, “a lot will hinge on the implementation of policy, especially in the United States.”

[lianxi-fanyi]

[Washington Post]: Trump Aides Suggest Imposing High Tariffs on Allied Nations, Sign “Mar-a-lago Accord” lowering the value of the US Dollar

(CNA) The world is paying attention to incoming US President Donald J. Trump’s tariffs, the Washington Post quoted future Head of the White House Council of Economic Advisers Stephen Miran in a previous report. Mr. Miran is in favor of levying high tariffs against US allies, and also suggests signing a "Mar-a-lago Accord", similar to the Plaza Accord, to lower the value of the US dollar. 

The whole world waits with bated breath to see the possible trends in Mr. Trump’s proposed tariffs. Will the tax rates against China, Canada, and Mexico be as high as previously proposed? Will American manufacturers shift to setting up factories domestically due to high tariffs? Will tensions rise if affected countries respond tit-for-tat? Will the global economy experience a recession as a result of a trade war? These are yet to be seen. 

The Washington Post reports Trump aides are already considering reducing the tariffs list and focusing on specific industries. This move would go against campaign promise, and a Trump statement has claimed it is fake news. Whether Trump will fulfill his campaign promises remains the focus of the news. 

On January 12, the Wall Street Journal quoted the appointee for Head of the Council of Economic Advisers Stephen Miran, a senior researcher at Hudson Bay Capital on his article published November 2024 “The Guidebook for Restructuring the Global Economy.” His analysis is something worth paying attention to. 

Miran holds an average import tax in the US from 20 percent, even as high as 50 percent, can still be profitable. Currently, the average import tax is 2%. Tariffs are one tool with which to handle long-term tensions when foreign intervention weakens the US dollar. The US supports the economies and military affairs of other countries, which has overvalued the US dollar, increasing the trade deficit, and gutting US-based industries.

He writes that placing tariffs and adjusting the US dollar will, in 10 years, supersede any policies or other influencing factors in changing international trade and the banking system. 

41-year-old Miran is a researcher at the conservative think-tank the Manhattan Institute, and holds a PhD in Economics from Harvard. The Washington Post pointed out, his think-tank research from before his appointment is really not a policy proposal, nor is it reflective of Trump’s personal views, but it can be used to understand how future policies may be implemented. 

Miran approves of the economic theory of the “Optimal Tariff.” "Monopoly buyers" have bargaining power. If you enact a tariff, exporters will absorb the costs themselves and the market price will not be affected. Even if consumers must pay a bit more, tariffs will offset manufacturing costs. 

The idea that tariffs of 20 to 50 percent can still be profitable comes from research by MIT Economics Professor Arnaud Costinot and UC Berkeley Professor Andres Rodriguez-Clare. Costinot has already pointed out, based on the tariffs laid against China during Trump’s first term, many US importers absorbed the tariff costs. 

Faced with the possibility of opposing countries raising retaliatory tariffs, and Miran says the Trump administration may announce a reduction in joint-defense obligations to these countries. In other words, if Japan, Korea, and NATO members enact retaliatory tariffs, the US may renege on its defense obligations. But, the report points out, it is important to note the countries with which the US has a trade deficit like China, Mexico, and Vietnam do not fall under the US protective umbrella. 

The international community is worried that since Trump did not promise to cease economic and military coercion against two US allies, Canada and Denmark, Russia and China may also employ a similar attitude towards their neighbors. The targets of the new Trump administration’s tariffs will also be a focal point. 

The report also suggested the US can imitate the 1985 Plaza Accord signed with Japan, England, France, and West Germany by signing a “Mar-a-Lago Accord” with allied nations to lower the value of the US dollar to promote industry and exporting. Following the signing of the Plaza Accord at the end of the last century, the Japanese yen appreciated and a real-estate bubble ensued, resulting in long-term economic stagnation for Japan. 

He believes after a few tariff increases, US trading partners such as Europe and China will acquiesce to signing monetary agreements in exchange for lowering punitive tariffs. As for the US national debt, it may be passed onto consumers as a “usage fee.”