It is not a surprise that the USA has converted trade policy into an aggressive economic weapon.
The multilateral rules-based and institutional order created after 1945 to the 70s is over. The world must establish a new system reflecting new emerging realities of world order.
A coordinated approach is essential for countries and multilateral institutions to bring about fundamental change to avert a decline in global standards of living, jobs and economy.
Furthermore, China must avoid flooding the world’s markets with cut-price goods it cannot now sell in the USA anymore. It must open up its market and encourage domestic consumption demand.
A new economic, financial and trade system is imminent that is beyond the control and dominance of one country and creates fair open competition for all countries.
For this to happen, a radical rethink of macroeconomic and financial policies is unavoidable to not only stabilise the global economy but also reduce the chances of economic depression
This is a generational strategic opportunity to reshape a new geopolitical landscape order.
The new world order leadership and major reform to the existing multilateral system are necessary to make it more inclusive, representative, sharing prosperity and equitable in burden sharing.
Countries must come and work together to develop new pathways to marshal grants, loans and financial power to support global struggling economies by reforming current global financial institutions and systems.
The scale of world production, investments and supply chains of goods and services will fundamentally change with technology, skilled labour and green energy playing major roles.
It will be important for countries to create a more fair and competitive world rather than adopting self-nationalism and protectionism policies.
Tariff war will have significant effects on currency, monetary and market order. The existing capital markets and economies are supported by unsustainably large debt because of the large imbalance between debtor-borrowers as well as between lender-creditors.
Thus trade war is likely to cause a debt default wave because of bonds and loan distress.
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