Arab FinanceA state of anticipation prevails in economic circles, with a date Inauguration of US President Donald Trump Tomorrow, Monday, there is a fear of the possibility of a global stagflation if the trade tariffs promised by US President Donald Trump continue.
Trump's trade policy included imposing customs duties on US imports coming from neighboring countries in addition to China, as he announced his intention to impose 25% customs duties on all products entering the United States from Mexico and Canada, and this step was part of Trump's strategy to strengthen the economy. American and the protection of local industries.
Trump also announced additional tariffs of 10% on goods imported from China. These tariffs are part of the trade conflict between the United States and China. It aims to reduce the trade deficit with China and encourage American companies to expand local production instead of relying on imports.
Trump's protectionist decisions will create disruption in international trade
For his part, Mohamed Qassem, head of the Egyptian Exporters Association, said in exclusive statements to Arab Finance that Trump’s economic policy and decisions are difficult to predict.
Qasim added that if Trump deviates from free trade policies, global international trade rules, and what was approved by the World Trade Organization, it will create a state of economic turmoil in the global economy and international trade.
Qasim explained that although these protective customs policies may harm some countries, there are countries that may benefit from these measures in some sectors, such as the ready-made clothing sector in Egypt, where Egypt may have a comparative advantage due to the QIZ agreement, which gives comparative advantages to Egypt in exports and customs exemptions. In this sector.
Qasim pointed out that the protectionist trend and imposing customs duties on American imports will also lead to reducing global trade and supply chains, which will have negative effects on the economy.
America will put pressure on China to achieve the greatest gains
For his part, Ambassador Ali El-Hafny, Egypt's former ambassador to China and Vice President of the Egyptian-Chinese Friendship Association, said that we must take into account Trump's first term, as US-Chinese relations went through some tensions as America exerted pressure on China to achieve its greatest economic gains.
Al-Hafni explained that the Chinese side was able to manage this tension in relations with America with some wisdom, pointing out that the tension with China will include the imposition of protective customs duties as well as other matters related to intellectual property.
The former Deputy Foreign Minister explained that China was able to lead the BRICS countries to use an alternative currency that faces the dominance of the US dollar, and what matters to Trump here is that the US currency and its value not be affected by this “BRICS” group, the number of whose members is increasing day after day.
Al-Hafni expected that relations between China and America would not reach the point of what we can call a crisis, as China is expected to manage the matter with complete wisdom, as the matter will reach an agreement that meets the minimum demands of both the Chinese and American parties.
He added that China also leads the Belt and Road Initiative, as it includes about 4,000 projects that have been implemented in many countries of the world, and it is an initiative that is constantly reviewed, and China often responds to Western allegations that accuse it of exploiting developing countries, as it declares the principle of win-win among these countries, noting On the other hand, America, in coordination with some Gulf states, the G20, and India, leads another trade route that starts from India, passes through Israel, and ends with European countries. It is a competing route to the Chinese road and initiative, the Belt and Road Initiative, which has been around for 10 years. It has achieved many benefits for its members, including Egypt, through new investments in many economic sectors. China has also achieved significant export gains estimated at billions, which has made it achieve a surplus in the trade balance amounting to one trillion dollars.
Reducing production as a result of US tariffs will raise costs and increase inflation
For his part, Dr. Wael Al-Nahhas, an economist and professor of finance and investment, said that the protectionist policies related to imposing US customs duties on imports will make things difficult for Egypt because they will reduce what factories produce as a result of weak exports after the chances of these US customs duties. Consequently, the cost will rise and inflation will increase as a result of the expected price increase.
Al-Nahhas explained that the large demand for the dollar will lead to an increase in the return on American debt instruments, which will affect Egypt and emerging countries as well, as this will lead to capital going to invest in American debt instruments instead of emerging countries such as Egypt.
Al-Nahhas stressed that Trump's policies will also lead to an increase in transportation prices as a result of the rise in fuel and oil prices, as the price of a barrel of oil has now reached about $80, which will ultimately lead to an increase in production requirements and everything related to manufacturing, as well as services, which will affect the American citizen and the entire world.
Al-Nahhas pointed out that the next war is the war of customs duties, noting that the goal of these duties is American hegemony over the global economy.
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