(MENAFN- AzerNews)
By Dr Frank Musmar
While tuning into the first debate, the voters expected to hear
some substance to address their concerns over many issues such as
the economy, crimes, climate, inflation, jobs, healthcare, Taxes,
immigration, the war in Ukraine, and the war in Israel are more
likely not watch the second in September. The first debate was a
style without substance.
Former President Trump's more disciplined and nimble approach
stood out, while President Biden's stumbling and frozen moments
raised concerns about his leadership abilities. Biden left the
pressing issues of the Economy and border control unaddressed.
In the earliest modern US debate , Biden's
lackluster showing not only spotlighted the Democrats' uphill
battle but also underscored the significant challenges they face in
the upcoming election.
President Biden's recent stumble, particularly his struggle to
articulate critical issues like immigration and abortion, has
raised significant concerns among Democrats, especially with the
election just around the corner. This struggle has intensified
tensions within the party and significantly impacted the Democratic
Party, underlining the gravity of the situation. The urgency of the
problem is palpable. After the debate, Biden's campaign waited 30
minutes to comment while Trump supporters flooded the room at a
ratio of 10 to 1. Soon after the debate, Democrats expressed
confusion and concern, and some Democrats called it the time for an
open convention. Biden's performance has reignited fears among
Democrats. Whether he can carry the party through to November now
looms large, adding a layer of concern to the upcoming
election.
Relations with South Caucuses under a Second Trump's
Term
Democracy and human rights, energy, and security are believed to
be the three central pillars of the US South Caucasian policy. Due
to the State's interest in transporting possibilities of the
Caspian basin's energy resources to Western markets, energy will
remain the main priority. Moreover, a continuation of certain
inertia, the non-active policy will be preserved under Trump as he
is famous for his declarations and practical approaches regarding
decreasing the US interference in other countries, especially
domestic affairs.
We might witness less interference from the side of the US in
the regional or state affairs in the South Caucasus; among the
three countries, Georgia will suffer more from
this policy as much more depending on the active Western and
especially American support.
Azerbaijan-US relations are expected to
flourish during Trump's second presidency as it
corresponds to Trump's non-interference policy agenda. A less
active policy of the US in the region will have less interest in
Armenia 's pro-Western rhetoric during Prime
Minister Nikol Pashinyan.
Accordingly, Azerbaijan will gain more economic
interest to attract more Western and American partners and
investments in its oil and gas, especially given the considerably
decreased Russian contribution caused by the anti-Russian sanctions
and the Ukrainian war.
The Iranian factor is another essential factor that will play a
specific role in the South Caucasus region. In the second of
Trump's presidency, the US withdrew again from the Iran nuclear
deal, and the imposition of significant US economic sanctions
against Iran is apparent, which will bring Azerbaijan a strong
security partner for Israel and the USA on Iran's borders.
It is evident Trump's US will engage more with some countries
and disengage with some in the South Caucasus; the deterioration of
the business or other relations with Iran from the side of Armenia
and Georgia is evident where these South Caucasian countries will
be losing more than they gain, they will not achieve anything
adequate back from the US on the expense of failing their business
projects with Iran and thus losing new significant commercial or
energy development opportunities due to the superpower's harmful
interference in this case as it appears. However, it seems that it
will be a golden opportunity for Azerbaijan to gain momentum and
better energy and security deals with the new Trump term in the
white house.
Global Trade Policies If Trump Wins
The possible re-election of Donald Trump as US president in
November 2024 could entail a significant upheaval for the world
trading order if he fulfills his announcements to raise tariffs (60
percent against Chinese goods, 10 percent against products from the
rest of the world), mainly to reduce the US trade deficit. Such
steps would blow further to the WTO, as the envisaged tariff
increases would violate international trade rules. It is worth
noting the tariffs President Biden added, including the 100 percent
tariff on Chinese-made electric vehicles (EVs). Moreover, President
Biden placed 50 percent tariffs on semiconductor imports ($1
billion a year) from China.
Donald Trump's previous first term in office was primarily
characterized by his refusal to sign up for a trade deal with Asian
countries, the re-negotiation of NAFTA, the marginalization of the
World Trade Organization (WTO), a trade war with China and
deteriorating trade relations with the EU that led to the partial
reform of the US free trade agreements with Korea (KORUS), Canada
and Mexico (NAFTA, later USMCA) as well as the conclusion of a
“mini-trade agreement” with Japan (USJTA).
Accordingly, the transatlantic relations with the EU are also
likely to suffer. First , old trade disputes
settled mainly with the Biden administration could flare up again,
e.g., regarding steel and aluminum. Second , Trump
could abolish cooperative measures by the Biden administration that
mitigate the protectionist elements of the US Inflation Reduction
Act for EU exporters. Third , the future of the
EU-US Trade and Technology Council (TTC) might be jeopardized.
Accordingly, we should expect the impact of two scenarios:
Scenario 1 entails increasing US tariffs to 10
percent on all US imports and 60 percent on US imports from China
in 2025. Donald Trump and his former trade advisers have publicly
envisaged these threats.
In scenario 2 , in reaction to scenario 1, China
would retaliate with a tariff increase of 40 percentage points on
imports from the US. The following results of the two scenarios
with the Global Economic Model of Oxford Economics for the four
years of a potential second Trump term from 2025 to 2028 stand
out.
The US economy (US GDP level) would be negatively affected in
the first years in the minus up to minus 1 to minus 1.4 percent in
the two scenarios due to a simulated temporary confidence shock in
the short term that has adverse effects on private investment and
consumption. Moreover, private consumption decreases due to higher
consumer prices and unemployment. A cumulated loss in the GDP over
the 4-year horizon amounts to nearly 600 billion US dollars in the
first scenario and almost 1,000 billion US Dollars in the second
scenario.
In scenario 1, however, the US GDP level would remain only
marginally negative in 2028 mainly because of the temporary nature
of the confidence shock and the improvements in the trade balance,
the fiscal balance, and the terms of trade. However, in case of
retaliation by China in scenario 2, the US would also suffer GDP
losses in the medium term, in the range of about half a percentage
point of GDP, with a slowly decreasing trend after 2028.
In absolute terms, the US trade balance would decline further
because other trends, like the rising US government deficit, are
more critical macroeconomic drivers of the trade balance than
tariffs. Moreover, the US loses competitiveness due to an
appreciation of the real effective exchange rate, which tends to
raise imports and reduce exports.
The EU would also be hit harder than the US. Given the negative
effect of a potentially renewed protectionism under Donald Trump,
the EU should proceed along two lanes: First, the
EU should prepare for such a scenario now. Before all, the EU
should use the remaining term of President Biden to put the trade
relations with the US on a more solid footing. In the best case,
this could be achieved by institutionalizing the TTC and by
convincing the Republican Party in Congress that the TTC is a
crucial forum to coordinate trade policies vis-à-vis China with the
EU.
Moreover, signing a critical minerals agreement and a Global
Arrangement on Sustainable Steel and Aluminum would be essential
steps to reduce the likelihood of a backlash from Donald Trump
concerning transatlantic trade relations. A further step should be
for the EU to foster its ties with other trading partners by
signing more free trade agreements, such as with Australia,
Indonesia, or India. Second , if Trump were elected
and threatened to implement new trade barriers against the EU, the
EU should be able to react. The EU should also be willing to
threaten credible retaliation measures to counter such a threat.
For such purposes, the Anti-Coercion Instrument was recently
implemented and could provide the framework for possible
retaliatory measures of the EU. While it is true that retaliation
would aggravate the trade war and have detrimental economic
effects, it appears necessary to have a counterstrategy founded on
realpolitik.
Relations with EU under a Second Trump's
Term
While Europe's populist, nationalist parties are likely to
remain too fractious to exert blunt power after the European
election, the sheer fact of their success is triggering a political
upheaval equivalent to that caused by Donald Trump's election as
U.S. president in 2016. After all, the results of the European
Parliament serve as a barometer of where national politics is
headed in some of Europe's most crucial capitals. Young men's
eagerness for change, high taxes and environmental regulations, and
skepticism toward supranational organizations like the EU, the
United Nations, and, in some cases, NATO were behind the rise of
the far right.
Accordingly, a slightly right-wing Europe is more appealing to
Trump. Immigration, inflation, and a rejection of the mainstream
“Trump's favorite themes” have all contributed to the far right's
rise in Europe.
The U.S. role in Europe brought extraordinary benefits but also
imposed extraordinary costs. The United States pledged to defend
countries thousands of miles away, even at the risk of nuclear war.
By providing foreign aid and allowing asymmetric access to its vast
home market, it rebuilt a continent and helped foreign countries
grow faster than the United States itself. Trump's policy with
Europe will be“get on your feet and off our back.”
A full-on withdrawal from NATO, which would enrage the remaining
Republican internationalists, might not be worth the political
price. But with Trump contending for the presidency and his
acolytes gaining strength among Republicans-and the threat that
China poses to U.S. interests in Asia growing ever more severe-it
is time to take seriously the possibility that the United States
might leave Europe someday and consider what might happen next.
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