Schadenfreude is not the perfect adjective to describe how most plutocrats are feeling about the tariffs imposed by the President.
It certainly wasn’t the word on their lips on the morning of the 6th of November 2024, when Donald Trump was declared the winner of the Presidential elections. In the last few days, a few of our wealthy friends have lost an absolute fortune, with the announcement of broadscale taxes on import items.
But for non-American commentators, Schadenfreude is the sentiment which we are feeling right now as the stock markets continue to tumble.
But then again, this is an incredibly parochial take from a ‘supposedly’ enlightened individual: in today’s globalized world, decisions made in Washington are felt everywhere.
And the United Kingdom isn’t different.
If anything, it is highly likely to be worse as we do not have the European Union cocoon to fall back on.
Our isolation from the strongest political bloc means that we will bear the severity of the arbitrary increase in taxes by the Trump administration, a phenomenon which makes my schadenfreude slightly misplaced.
African nation-states which trade quite heavily with China, these days are also bound to suffer from the high tariffs.
And with this reality fully upon us, it is safe to say that a global war is upon us.
The old America which used to govern the world by way of the Washington consensus —IMF, World Bank and the UN — is dead.
The United States of America is being remade right before our very eyes and as opposed to invading China and the rest of the world with its military, its punitive tariffs are an insidious way of declaring war on its fiercest foes.
Now how will it all pan out? Will China’s retaliatory tariffs have the desired effect? Will China’s huge trade surplus survive these changes? And will American industry stage the greatest comeback in the history of capitalism?
And we must ask, Is Trump leading his country and the rest of the world to perdition?
Yes and no.
In a global system which is contingent on the use of the dollar, the number of losers will be much higher than winners.
China, whose surplus comes from selling all kinds of merchandise to America will take some massive hits and so will Europe.
Canada’s only hope is that the Liberals under Mark Carney win the most seats at the next elections, which will allow it to continue to provide some form of leadership.
In America, a good number of hedge funds are perilously close to a margin call and millions will soon lose their health coverage as cuts will be made by Congress.
Already, the unlikeliest of alliances are being formed with China, South Korea and Japan are actively collaborating with other but it is too soon to tell how much of a difference this will make.
No country will emerge from these changes the same as before.
Foreign Exchange are op-eds from writers who do not live in the U.S. They have thoughts but don't have a dog in the race.