The writer is the editor of Fine Writer, CEO of the Royal Society of Arts and former chief economist of the Bank of England
Ten thousand people:noun. A panic-minded person or party overreacts in a weak and stupid way. derogatory.
This new study is one month old. There is an irony that within a week after the invention, its author (the President of the United States) himself became a member of the card. "Liberation Day" took only 24 hours of chaotic bond markets to give way to the "Comeppance quarter" and suspended tariffs for 90 days.
Nevertheless, the questions raised by the U.S. president are still as important now as they were then. Are financial markets, politicians and the media responding too much to his tariff announcement? Are the 24/7 catastrophic disasters in financial markets and media routinely declared the end of the world?
The impact of tariffs, especially fear of unknown escalation in it, is very real. If the arms race is underway, a day of liberation can herald a decade or more of hibernation in world trade and growth. The arc of trade history has a shocking regularity, tending toward darkness.
Over the past 250 years, tariff shocks in the United States have occurred in a conventional half-century cycle: 1789, 1828, 1890, 1930, 1971. Everyone left lasting macroeconomic scars – in the penultimate case (smoot-hawley Pariffs), the ultimate depression deepened, and in the final case ("Nixon Shock" was shocked. Both were remembered for the wrong reasons, great.
For half a century, as world trade is now both larger and intertwined, it is expected that the scars of tariff shock will be deeper in 2025. This has been proven by blood economic forecasts over the past month, and it is now a recession in the United States. Therefore, in the financial market, the global stock market lost more than 6tn losses, suggesting a triple volatility.
However, at the other end of this argument, no one today would have no doubt that without years of redesign, the cradle of Cat’s global supply chain could not be carried out at a catastrophic cost. The interconnection of world trade and the cost of disconnection are the best fortresses for tariff escalation.
The excessive sensitivity of financial markets adopts double locks. By telescoping and amplifying these costs, they can serve as real-time discipline devices for politicians claiming that they can survive short-term pain. This makes surrender faster than in the past. Smoot-Hawley's tariff lasted for four years and Nixon's tariffs were four months. Trump's worst tariffs lasted only for a week.
Tariffs can be raised again. But once bitten, I was shy twice. Over the past month, the U.S. president has been psychologically scarred and thinly skinned because of his corporate and financial markets owned by Thall. The irresistible self-importance helps cause tariff spikes in the United States, but the unshakable object of self-protection will be its revocation.
Therefore, for all the rhetoric of the new world order, the power of the global mean reversal may actually be stronger than ever before. A new financial order is generally expected after the global financial crisis. Over the past twenty years, we have seen some flow redirection, but not a lot of disassembly. If recent events strengthen world trade, even China, world trade may follow a similar path.
Meanwhile, despite the frustrating external expressions, the past month has been a political godsend for many world leaders. Trade wars and talk about the new world order are calling for flags and unpopular regimes (XI Jinping in China, Emmanuel Macron in France, Vladimir Putin in Russia), providing oven replacements for new ovens (Friedrich Merz in Germany, Mark Carney in Canada, Mark Carney in Britain, Keir Starmer in Britain).
However, except for China, the solemnly announced escalation by many leaders so far is largely semantic rather than substantial. We have a month of mutual speech, not tariffs. If the mean reversal and the force of self-protection remains strong, then the lasting May (and will) is long.
The possible era of globalization is possible. Trump’s tariffs may also mark a new trade chapter. However, it is more likely that the historical arc will bend towards the light, with the recent event being the people of the chapter rather than the title. What we witness is panic about the world economy rather than a heart attack, and is actually a self-stabilizing person. In an age of overly anxious, rudderlessness, the rise of thousands of people may save us from ourselves.